As Nigeria gears up for the implementation of a new tax law effective January 2026, the nation stands at a crossroads of fiscal policy and public welfare.
This article explores the intricacies of the law, focusing on tax rates, eligibility criteria, assessment methods, and its profound impact on the common man. It also critically examines the government’s approach to taxation amidst ongoing challenges in public service delivery.
The new legislation stipulates a tax rate ranging from 15% to 25%, with an average of 20% on individual income. This marks a significant shift, as many Nigerians, particularly those in informal sectors, have historically paid little to no tax.
Eligibility is determined by an annual income threshold of ₦800,000, approximately ₦67,000 monthly or ₦2,300 daily. This threshold encompasses a broad swath of the population, including small business owners and daily wage earners, thereby expanding the tax base considerably.
The law’s enforcement is bolstered by a robust assessment framework that integrates key identification tools: the Bank Verification Number (BVN), National Identification Number (NIN), Tax Identification Number (TIN), and bank accounts.
These tools ensure that virtually no one can evade taxation, as financial transactions are meticulously tracked. This digital infrastructure, while aimed at transparency and compliance, raises concerns about privacy and the potential for overreach.
For the average Nigerian, particularly those in non-formal sectors such as barbers, electricians, and street vendors, the new tax law represents a seismic shift. Previously untaxed, these individuals now face mandatory contributions, which could lead to increased operational costs.
Consequently, consumers may experience higher prices as these costs are passed on. Moreover, the law introduces criminal liabilities for tax evasion, discouraging practices like hiding personal income in corporate structures, which some might consider as a means of survival rather than evasion.
A glaring issue is the lack of tangible benefits for the common man despite increased taxation. Many Nigerians still contribute personally to fix community infrastructure, such as transformers and roads, due to the government’s failure to deliver essential services.
This situation is compounded by the opacity surrounding the utilization of funds from fuel subsidies, current taxes, and oil windfalls. The government’s structure remains over-bloated, with little evidence of efficient resource allocation or improved public welfare.
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The new tax law’s introduction without clear workings on how previous revenues were managed fuels public skepticism. For instance, the removal of fuel subsidies and the management of oil revenues have not translated into visible improvements in infrastructure or social services.
The common man’s continued reliance on personal contributions for basic amenities underscores a disconnect between tax collection and public benefit. This raises questions about the government’s fiscal responsibility and the legitimacy of further burdening citizens without corresponding improvements.
The 2026 Nigerian tax law, while aimed at broadening the tax base and increasing revenue, places a significant burden on the common man without assured benefits. The integration of BVN, NIN, TIN, and bank accounts ensures compliance but also heightens the risk of double taxation and inflated costs.
As the nation approaches this new fiscal era, the government must address the credibility gap by demonstrating transparency and accountability in its financial management. Otherwise, the law risks being perceived not as a tool for national development but as an additional layer of hardship for an already struggling populace.
