The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has asserted that more than 90 per cent of operators in Nigeria’s informal sector do not possess the capacity to pay taxes.
Oyedele made this statement during an interactive session with journalists and public analysts on the new tax laws on Friday, directly challenging the widespread notion that significant government revenue lies untapped within the informal sector.
Rationale for Not Taxing the Poor
Oyedele argued that attempting to chase and tax these individuals is what leads to the introduction of multiple taxes in Nigeria. He stressed that the majority of operators in that sector are simply engaged in survivalist activities:
- “When in fact, more than 90 percent of operators in that sector are just there for survival… They have no capacity to pay taxes and should not be taxed.”
- He cited examples of corn roasters, vulcanisers, and wheelbarrow pushers, noting that despite having customers throughout the day, they remain poor.
This reasoning, according to Oyedele, is why President Bola Tinubu insisted that poverty and capital should not be taxed, adding the quote: “We should not tax seeds but wait for the fruits.”
New Tax Reforms to Curb Leakages and Corruption
Oyedele highlighted that the new tax laws are designed to make tax evasion expensive and have introduced tighter structures to strengthen accountability among professionals and tax officers.
- He noted that the Federal Inland Revenue Service (FIRS) collected over ₦20 trillion in taxes last year and is on track to surpass that figure in the current year.
- The reforms have introduced personal liabilities for tax officers who fail in their duties.
- The reforms have also removed opportunities for leakages by ensuring all taxes now go directly into the federation account, rather than accounts controlled by FIRS.
- He concluded that the new laws address corruption by making it more expensive for taxpayers to evade tax, while also strengthening the monitoring of consultants and holding tax officers more accountable.
