Nigeria’s Informal Sector Operators Lack Capacity to Pay Taxes, Says Fiscal Policy Chief
More than 90 percent of Nigeria’s informal sector operators do not have the capacity to pay taxes, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee. Oyedele made this statement during an interactive session with journalists, influencers, and public analysts on the new tax laws. He countered the widespread narrative that government revenue lies untapped in the informal sector, stating that most operators in this sector are struggling to survive.
Oyedele explained that introducing multiple taxes has been a result of attempting to collect taxes from individuals who are barely getting by. He cited examples of street vendors, vulcanizers, and wheelbarrow pushers, emphasizing that despite having customers, they remain poor and lack the capacity to pay taxes. The chairman noted that President Bola Tinubu has insisted that poverty and capital should not be taxed, advocating for a wait-and-see approach, where taxes are collected when the fruits of labor are realized, rather than taxing the seeds.
The new tax laws in Nigeria have introduced stricter measures to prevent tax evasion, making it more expensive for individuals and professionals to dodge taxes. The Federal Inland Revenue Service (FIRS) collected over ₦20 trillion in taxes last year and is on track to surpass this figure this year. The reforms have also introduced tighter structures and stronger accountability, with personal liabilities for officers who fail to perform their duties.
The fiscal policy chief stated that the reforms have removed opportunities for leakages, with all taxes now going directly into the federation account rather than accounts controlled by FIRS. Oyedele also addressed corruption in the tax system, noting that taxpayers, tax officers, and consultants have all contributed to malpractice in the past. The new tax laws have provisions to address these issues, making it more expensive for taxpayers to evade taxes and introducing registration requirements for tax agents.
The introduction of these new tax laws marks a significant step towards strengthening governance and accountability in Nigeria’s tax system. With a focus on preventing tax evasion and promoting transparency, the country aims to increase revenue collection while protecting the interests of its citizens. As the implementation of these laws continues, it is expected that the tax system will become more efficient and effective, ultimately contributing to the country’s economic growth and development.
