NECA rejects tax hike, warns FG against IMF demand

The Nigeria Employers’ Consultative Association (NECA) warns that the International Monetary Fund’s recommendation for the Federal Government to raise taxes in order to curb borrowing could impede economic growth and worsen the country’s challenges. In a statement on Sunday, NECA Director General Wale Oyerinde said that while the proposal might seem beneficial to the government by boosting revenue, it would have detrimental effects on households, businesses, and the broader economy. “The IMF’s call for higher taxes to reduce borrowing spells disaster for an economy already struggling to stay afloat,” Oyerinde said. “Any attempt to hike taxes would negatively impact households, individuals, and businesses. This cannot be overstated.”

During the IMF/World Bank Spring Meetings in the United States, the Washington‑based lender reiterated its advice to Nigeria to expand the tax net, increase tax rates, and reduce the nation’s debt burden. Oyerinde cautioned that imposing additional taxes on an already strained private sector could make the business community more vulnerable, undermining growth and job creation. “In an environment where individuals and corporations provide services and infrastructure that should normally be supplied by the government, the best the government can do is support and ease their burdens rather than make them pay for its inefficiencies and fiscal indiscipline,” he argued. “Not every recommendation from development agencies should be implemented without considering the specific context.”

Oyerinde also noted that raising taxes amid rising inflation is ill‑advised, as tax policy affects more than just public finances. Higher taxes would erode individuals’ purchasing power, suppress consumption, and threaten social cohesion. “Countries typically reduce taxes during economic downturns and raise them in booms. We are not in a boom,” he explained. “A tax hike would increase the burden on taxpayers, encourage avoidance, trigger capital flight, and deter foreign direct investment.”

The NECA chief emphasized that widening the tax net, rather than increasing rates, is the preferable approach. “We support the IMF’s recommendation to broaden the fiscal base. It is the way forward,” Oyerinde said. He added that addressing the rising cost of governance at all levels would reduce recurrent expenditures and, consequently, the need for borrowing.