Tinubunomics: Is tax reform a burden or a blessing for Nigerians?

In June 2025, President Bola Ahmed Tinubu signed four landmark tax reform bills into law, heralding a significant overhaul of Nigeria’s fragmented and often oppressive tax system. Described by the administration as a transformative step toward fiscal stability, the reforms, comprising the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill, aim to simplify tax compliance, boost revenue, and ease the burden on low-income earners and small businesses. Crafted under the guidance of Taiwo Oyedele’s Presidential Committee on Fiscal Policy and Tax Reforms, these laws promise a fairer, more efficient system. However, while the reforms offer relief for some, they also raise concerns about implementation, regional disparities, and hidden costs for average Nigerians. This piece is set to explore the implications of Tinubu’s tax reforms, questioning whether they truly serve the common citizen or risk exacerbating existing inequalities.

A pro-poor promise and the relief for low-income earners

On paper, the reforms appear tailored to alleviate the financial strain on Nigeria’s most vulnerable. The Nigeria Tax Bill exempts individuals earning ₦800,000 or less annually roughly 70% of Nigerians, from personal income tax, a significant shift from the previous 7% tax on incomes as low as ₦300,000. For minimum wage earners, this translates to an immediate increase in disposable income. Additionally, essential goods and services like food, healthcare, education, rent, and public transportation are now zero-rated for Value Added Tax (VAT), potentially lowering living costs for families spending nearly all their income on necessities. Small businesses with annual turnovers below ₦50 million are also exempt from company income tax and simplified filing requirements, a boon for the informal sector that dominates Nigeria’s economy.

These measures are undeniably pro-poor in intent. For a market woman in Lagos or a teacher in Kano, the promise of tax-free income and cheaper essentials could ease the sting of Nigeria’s 22.97% inflation rate in May 2025. Reactions on social media shows cautious optimism, with some praising the reforms for prioritizing “those who are not wealthy,” arguing they protect low-income households from the tax net. By consolidating over 60 overlapping taxes into a single, clearer code, the reforms also aim to reduce the harassment small traders face from multiple tax agencies.

Yet, the success of these relief measures hinges on implementation. Nigeria’s history of policy promises outpacing delivery breeds skepticism. The same tax authorities notorious for extortion must now enforce these exemptions transparently. Without robust oversight, low-income earners and small businesses may still face harassment, as Chidinma’s concerns suggest. Moreover, the reforms’ benefits could be undermined by inflation and currency devaluation, which have already driven up costs since Tinubu’s earlier policies, like fuel subsidy removal, sparked a cost-of-living crisis. For the average Nigerian, relief on paper may not translate to relief in practice.

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Business incentives or hidden costs?

The reforms offer significant incentives for businesses, particularly small and medium enterprises (SMEs). By exempting SMEs with turnovers below ₦50 million from income tax and simplifying compliance, the government aims to foster entrepreneurship and job creation. Reduced withholding tax rates for Nigerian businesses (5% versus 10% for foreign firms) incentivize local investment, potentially boosting sectors like tech and agriculture. For young entrepreneurs, exemptions for startup employees in tech-driven services are a notable win, encouraging innovation in a country with a burgeoning digital economy.

However, these benefits come with caveats. The reforms’ focus on voluntary compliance assumes a level of trust in institutions that many Nigerians lack. Tax expert Nongomin Joshua questions whether the government, marred by decades of corruption, can manage revenues effectively. Small business owners like Chidinma worry that exemptions may be replaced by new, unclear levies, perpetuating uncertainty. Moreover, the reforms do not address broader economic challenges, such as stagflation and high borrowing costs, which stifle SME growth. A 4% customs tax introduced in 2025, despite Tinubu’s “no new taxes” pledge, risks being passed on to consumers, further squeezing household budgets.

For the average Nigerian, the business-friendly aspects of the reforms may indirectly increase costs. While VAT exemptions on essentials are welcome, posts on X warn that a proposed VAT hike from 7.5% to 12.5% on non-essential goods could hit poor consumers hardest, as businesses pass on costs. Without addressing inflation or improving enforcement, the reforms risk creating a system where the wealthy benefit from tax breaks while ordinary citizens bear the brunt of rising prices.

A political gamble with high stakes

Tinubu’s tax reforms are a political tightrope. By prioritizing low-income earners and SMEs, the administration aims to restore public trust battered by earlier reforms like fuel subsidy removal. Yet, the northern backlash reveals the challenge of balancing regional interests in a diverse nation. Social media posts reflect mixed sentiments: some hail the reforms as “solid” for ordinary Nigerians, while others decry them as “half-baked” and regionally divisive. Tinubu’s insistence that “tax reform is here to stay” signals determination, but his 2027 re-election bid may hinge on whether these policies deliver tangible relief.

The reforms’ success depends on implementation and trust-building. The creation of the Nigerian Revenue Service and Joint Revenue Board aims to enhance transparency, but Nigeria’s track record of bureaucratic inefficiency raises doubts. The reforms also fund initiatives like the Nigerian Education Loan Fund through a development levy, which could benefit youth but risks diverting resources if mismanaged. For the average Nigerian, the promise of a “fairer, leaner” system must overcome decades of governance failures to feel real.

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Conclusion: A step but not a giant leap

Tinubu’s tax reforms offer a bold vision for a simplified, equitable tax system, with clear benefits for low-income earners and small businesses. Exemptions on income tax and VAT for essentials could ease the burden on millions struggling with Nigeria’s economic crisis. However, regional disparities, shaky implementation, and potential cost pass-throughs threaten to undermine these gains. For the average Nigerian; a trader, teacher, or driver, the reforms are a double-edged sword: a promise of relief tempered by doubts about delivery. Without addressing corruption, inflation, and regional imbalances, Tinubu’s reforms risk becoming another chapter in Nigeria’s long history of unrealized potential. True transformation requires not just new laws but a new commitment to accountability and equity.