Hardly anyone disagreed that Nigeria needed a new tax regime. The erstwhile tax rules were complex and cumbersome, their administration ridden with corruption and inefficiency. So, when, in August 2023, barely four months in office, President Bola Tinubu inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms, he was on to something truly transformative if carefully crafted and shaped by a broad consensus. Unfortunately, however, the tax reforms started off on the wrong foot and ended, after a tortuous process, with new tax laws tainted by bad faith, manifested in skulduggery and cognitive biases that threaten to undermine the integrity and, thus, success of the new tax regime.
The problem started when President Tinubu, who imperiously changed the National Anthem without any public consultation, capriciously introduced a radical proposal to change the VAT sharing formula from 20 per cent for derivation to 60 per cent. Tinubu didn’t canvass the proposal during his presidential campaign to secure an electoral mandate for it and yet did not actively consult on the proposal before introducing it in power. But unlike the whimsical change of the National Anthem, which the National Assembly and the country acquiesced to, because no personal or sectional interest was particularly invested in a “mere” song, the VAT formula was a different kettle of fish: Northern legislators and leaders viscerally opposed changing the sharing formula. “It is against the interests of the North”, a Northern governor said of the proposal. “It will destroy the North,” said another.
In a true federal system, tax reforms that have nation-wide application require not only the buy-in of diverse stakeholders but also consensus between the federal and state governments. However, the presidency blindsided the state governors on key aspects of the tax reform bills. In November 2024, at the meeting of the National Economic Council, NEC, Nigeria’s 36 state governors unanimously asked the president to withdraw the bills from the National Assembly to allow for “more comprehensive consultation and consensus-building among key stakeholders”. The presidency rejected the call. Yet, it was the state governors, who, after a meeting with the Presidential Committee on Fiscal Policy and Tax Reforms in January 2025, later brokered a deal that eventually led to the passage of the tax reform bills at the National Assembly. But that brokered deal rejected the presidency’s key proposals, such as on the VAT sharing formula, increase in VAT rates and terminal clauses for certain agencies.
Truth be told, the controversies and forced compromises that dogged the tax reforms and that ultimately led the National Assembly to pass the tax bills, which the president signed into law on June 26, 2025, produced new tax laws that do not substantially satisfy anyone. This has implications for the implementation of, and compliance with, the new tax laws as some dissatisfied vested interests might try to undermine their smooth implementation or operation. Indeed, it is arguably because of this zero-sum, your-gain-is-my-loss, approach that the gazetted versions of the tax laws are different from those approved by the National Assembly and signed by the president. Simply put, some entrenched interests wanted to impose, through subterfuge and extra-constitutionally, their preferred versions on the country.
But before exploring the “forgery” further, we should bust one myth, which, for me, also touches on the integrity of new tax laws. The myth is that the income tax rates are pro-poor and progressive. Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, repeatedly says that “98 per cent of Nigerian workers” will pay no tax under the new tax laws, because income tax for anyone earning N800,000 or less per annum is zero-rated. But N800,000 is equivalent to the annual sum of the minimum wage. The minimum wage is N70,000 per month; multiply that by 12, you get N840,000. So, if a worker earns the minimum wage, which as Oyedele implies, applies to 98 per cent of Nigerian workers, he or she pays no tax on the N800,000!
Great! But elsewhere, such as in the UK, those on a low income, such as minimum wage earners, are not only exempt from income tax, but they also receive generous universal credit, including income support. So, there is absolutely nothing unique about exempting minimum wage earners from income tax. And talking about progressivity, what’s progressive about asking everyone who earns anything above N50m per annum to pay the same tax rate, that is 25 per cent? This means that if someone earns N100m, he/she will pay 25 per cent on the additional N50m, while an Aliko Dangote who earns several billions above N50m will pay the same 25 per cent. In the UK, billionaires pay 45 per cent income tax. Oyedele insults people’s intelligence by mouthing the pro-poor and progressive taxation mantras, knowing what obtains in other countries, especially those with social security/safety nets for the poor.
Now, coming back to the “forgery”, it’s evident that the gazetted versions of the tax laws differed in content from the versions the National Assembly approved and the president signed. According to the interim report of the House Minority Caucus Ad-hoc Committee on Tax, there were “notable and significant differences” between the versions published in the Official Gazette and those passed by the National Assembly and signed by the president. For instance, some provisions in the Certified True Copies, CTCs, of the acts, such as parliamentary oversight of the new Nigeria Revenue Service, NRS, were excluded from the gazetted versions, while some provisions not included in the CTCs, such as expanded enforcement powers, were added to the gazetted versions. Kingsley Chinda, chair of the minority caucus, said the alterations constituted “a breach of the Constitution and an affront to the legislature’s authority”. But Philip Agbese, the House’s deputy spokesman, a member of the ruling party, APC, sought to dismiss the issue by saying that the release of the CTCs had settled concerns about the true laws as if that answered the fundamental question of why the gazetted versions of the tax laws differed materially from what the National Assembly passed and the president signed.
Last week, the presidential tax reform committee suspended the issuance of the implementation guidelines for the new tax laws “to resolve emerging uncertainties regarding the final gazetted versions of the legislation”. According to Oyedele, the committee’s chair, “it is critical to address the discrepancies identified between the harmonised bills signed by the president and the versions currently in circulation.”
He clearly admitted that the gazetted versions of the laws were different from the versions approved by the National Assembly and signed by the president. But who produced the gazetted versions and why? Do they not know that their action has significantly damaged the integrity of the new tax regime? If vested interests in government could behave so unscrupulously, what’s the evidence that the same corruption that dogged the old regime won’t undermine the new one, especially with an all-powerful, omnibus, yet apparently unaccountable, NRS? The fact that the gazetted versions attempted to water down parliamentary oversight of the NRS says it all!
Unfortunately, government has allowed perverse cognitive biases, like confirmation and optimism biases, to shape its approach to the new tax regime, aggressively rejecting criticisms, such as its response to KPMG’s recent intervention which highlighted “inherent errors, inconsistencies, gaps and omissions” in the new tax laws. But nothing erodes public trust in any tax regime more than concerns about its integrity and legitimacy. That’s the challenge facing Tinubu’s flagship tax laws: Bad faith!
*Dr Fasan is the author of ‘In The National Interest: The Road to Nigeria’s Political, Economic and Social Transformation’, available at RovingHeights bookstores.
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