Why Illegal Levies Persist in Nigerian Markets Despite Tax Regulations
For many Nigerian traders and transporters, paying an official tax does not always end the demands for money. Multiple revenue collectors, overlapping charges and unauthorised collections have made doing business more complicated, prompting a fresh attempt by states to reform the system.
Nigeria has spent years trying to address multiple taxation, a problem that increases business costs and creates uncertainty for traders, transporters and small business owners. Yet, despite existing tax regulations, illegal levies and roadside collections remain concerns across the country.
On October 28, 2026, the Joint Revenue Board (JRB) disclosed that 21 states had passed the Model Harmonised Taxes and Levies Law. The legislation seeks to simplify revenue collection, eliminate duplicate charges and prevent unauthorised collections.
According to the board, the framework consolidates more than 100 existing taxes, levies and charges into nine categories. However, the continued presence of illegal collectors raises questions about why previous arrangements have struggled to resolve the problem.
How multiple taxation became a problem
Multiple taxation occurs when individuals or businesses face overlapping tax demands from different authorities or are charged repeatedly for the same taxable activity.
Nigeria operates a federal system in which the federal, state and local governments have different revenue responsibilities. However, poor coordination, overlapping demands and inconsistent collection practices can create confusion over which authority is entitled to collect particular taxes or charges.
The problem also extends beyond legitimate taxation.
In markets and along transport routes, traders and drivers may encounter people demanding money for tickets, sanitation, security, loading, parking or other activities. Some charges may have a lawful basis, but others may be duplicated or imposed by people without the necessary authority.
The distinction matters because not every levy is illegal, but a demand does not become lawful simply because a collector claims to represent a government agency or association.
The Institute of Chartered Accountants of Nigeria has previously identified overlapping taxing powers, inadequate tax education, multiple revenue agencies and unorthodox collection methods among the causes of multiple taxation.
Why illegal collections persist
One challenge is the number of actors involved in revenue collection.
When state and local authorities operate separate collection arrangements without effective coordination, businesses can struggle to determine which payments are legitimate. The presence of unofficial collectors adds another layer of uncertainty.
Cash-based collection can make the situation harder to monitor. Without proper documentation, it may be difficult for taxpayers to establish who received their money, what the payment covered or whether the collector had legal authority.
Enforcement is another concern. Passing legislation does not automatically stop people who have collected unauthorised levies for years.
In May 2026, the Edo State Internal Revenue Service reported that the harmonised law was intended to improve local government revenue administration. The framework restricts cash collection and the use of roadblocks to collect taxes and statutory charges.
However, its effectiveness depends on how consistently states and local governments implement the provisions.
What the new laws are designed to change
The Model Harmonised Taxes and Levies Law seeks to establish clearer rules for revenue collection across participating states.
The nine categories cover income tax, stamp duties, property tax, road tax, haulage levy, economic development levy, harmonised levy, user charges and daily tickets.
These categories include charges associated with activities such as parking, waste disposal, market trading, abattoirs and transportation.
The framework also prohibits the sale of revenue stickers and emblems, roadblocks for tax collection and unauthorised cash collections.
The JRB said it was working with the police and state revenue authorities to establish an enforcement structure targeting illegal collectors, particularly those operating on highways.
The board has also emphasised the need to verify questionable revenue demands with the appropriate authorities rather than pay into private accounts.
How illegal levies affect consumers
The consequences extend beyond traders who pay the charges.
Transporters facing repeated demands may spend more moving goods between markets, warehouses and distribution centres. Businesses can then pass some of these additional expenses on to consumers through higher prices.
This is particularly important for food distribution, where transportation costs influence the final prices paid by households.
The JRB has linked illegal roadside collections to higher transportation costs and, consequently, the cost of goods.
However, eliminating illegal levies alone will not resolve every factor driving prices. Fuel costs, insecurity, logistics and other operating expenses also affect the movement and sale of goods.
Will the reforms end the problem?
The adoption of the harmonised law by 21 states marks progress towards a more consistent tax system, but 15 states had yet to enact the model legislation as of October 28.
More importantly, the number of states adopting the law will not, by itself, establish whether illegal collections have declined.
Authorities must ensure that revenue collectors follow the rules, taxpayers can verify legitimate demands and offenders face appropriate consequences.
For traders and transporters, the real test will be whether the reforms reduce repeated payments, roadside harassment and uncertainty over legitimate charges.
Until implementation catches up with the legislation, the gap between the rules and everyday experiences of businesses may remain a challenge.