Sailing The Boat Of Taxation In Nigeria, Where Is The Destination?


By Ayoade Olatokewa

Osaretin lato, a youth corps member, recently passed out as part of the batch B set in September 2020, under my department in the newsroom, left me in a pool of endless thought about the future of this country when I tried to convince him stop those protesting in the#sars and swat protest  by the youth in Nigeria to end police brutality and injustice.

Lato was part of the youth protesting for #END SARS and police brutality in Nigeria.

When I saw a video of how he was attacked by the prosars group, I called him as one of the corp  members  am fond of, and advised him to stay off the protest because he could end up being a victim of a straight bullet.

” Lato in his usual courteous manner politely told me”Ma, you people never did anything and that’s why it got this worse.

I need to stand up and fight for your young son who is just 11years and loves to play with computers and hope to be an inventor in future, so that when he becomes a young adult like me, he will not face harassment from these wicked SARS guys.

His words left me dumbfounded and I realized it is time for a revolution and rebirth of a better and new Nigeria.


 Wondering where i’m going, it’s the concern over   tax accountability in Nigeria, because we also need our tax to work for us by providing good health care, standard and affordable education, good roads and other basic amenities other countries use taxpayers money for.

Tracing history, the last 10 decades, the tax system and administration seem to be an era without much potential to help the country, until Lagos State under the former Governor, Ahmed Bola Tinubu, between 1999 and 2007 began the reformation of mopping up huge revenue for Lagos State government from taxation.

…Good as it was, it became the popular saying of Robbing peter to pay Paul

How? Let’s unfold the sinking boat on the journey of Alpha beta…

In an investigative story by Nigeria’s online investigative news site, Premium Times on October  8,2020 a Nigerian chartered accountant, accused a former governor of Lagos State, Bola Tinubu; a consulting firm, Alpha-beta, and a former commissioner in the state, Akin Doherty, of money laundering, fraud, tax evasion, and sundry corrupt practices.

Alpha-beta is a consulting firm handling the computation, tracking and reconciliation of internally generated revenue,(IGR) in Lagos State in return for a commission.

Mr Apara, who claims to own 30 per cent stake in the company, alleged that Mr Tinubu “has directed and dictated the affairs” of the company by diverting assets to himself at the detriment of the claimant (Mr Apara).

Mr Apara claimed that sometime in 2000, he solely conceived, prepared and presented a proposal to the Lagos State Government on providing consultancy services using his firm, Infiniti Systems Enterprises, with respect to using computerization to track and reconcile the Internally Generated Revenue (IGR) of the state.

Although the case is still ongoing in court, this goes to show that the Lagos state tax revolution is still a failure despite so much revenue generated from tax, as 70 percent of the generation still goes into an individual account. what a pity!

The Arab Spring was a series of anti-government protests, uprisings, and armed rebellions that spread across much of the Arab world in the early 2010s. It began in response to oppressive regimes and a low standard of living, starting with protests in Tunisia, from Tunisia, the protests then spread to five other countries, namely, Libya, Egypt, Yemen, Syria, and Bahrain, likewise in Morocco, Iraq, Algeria   and others.

No citizen in Nigeria will wish it degenerated to the level as it was in these countries, but there is a need for the government to be cautioned and watch it.


The Federal Government plans to increase tax, review tax waivers, and concession to generate revenue to fund its 2021 ‘Budget of Economic Recovery and Resilience’. With a budget deficit of N5.19 trillion, which represents 3.64 percent of Nigeria’s gross domestic product?.

Where will the tax come from with recession staring the economy in the face and multi level corruption in the tax system?

The yellow vests movement in France that began in October 2018,was equally grass root movement that started similarly like the #Endsars protest, the yellow movement which was initially motivated by rising fuel prices and high cost of living began this way and later metamorphosed to disproportionate burden of the government’s tax reform, hence, government need to apply a break check.

Should the government be borrowing to balance the deficit? when we cannot even properly account for what we are generating.During the 2021 Budget presentation tagged ‘Budget of Economic Recovery and Resilience’ to the National Assembly on Thursday 8th,2020,.

Buhari said the 2021 budget deficit, inclusive of Government-Owned Enterprises and project-tied loans are projected at N5.20 trillion.

He added that the deficit represents 3.64 per cent of the estimated Gross Domestic Product (GDP) of the country.

“The 2021 Budget deficit (inclusive of Government-Owned Enterprises and project-tied loans), is projected at N5.20 trillion. This represents 3.64 percent of estimated GDP, slightly above the 3 per cent threshold set by the Fiscal Responsibility Act, 2007,” said Buhari.

The President added that the deficit of the annual budget would be financed by new borrowings of N4.28 trillion and N205.15 billion.

He stated that N709.69 billion of the deficit would be gotten from drawdowns on multilateral and bilateral loans secured for specific projects and programs

“The deficit will be financed mainly by new borrowings totaling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in draw downs on multilateral and bilateral loans secured for specific projects and programs,” Buhari told the National Assembly.

“Government needs to reconsider borrowing for infrastructures, they are facing two problems, one is the inability to collect revenue and the other is the rising debt profile of the country.

A week after peaceful protests by Nigerian youths under the banner #ENDSARS directed against police brutality, was met with state brutal force And the killings of some protesters, now hyped as  #The Lekki Tollgate Massacre#, it was discovered, in the estimate of Muda Yusuf, the Director-general of the Lagos Chamber of Commerce and Industry (LCCI)  that toll revenue loss is also estimated at about N234 million   naira in 13 days and multiply this in weeks and years since Lagos state introduced the toll gate, and this is just for states and as well calculate with airport toll fees across the 36 states, including the FCT, one will wonder where the remittances are with the deplorable state of infrastructure and education in Nigeria.


Estonia has the best tax law in the world.

According to Tax foundation, mainly four positive features of its tax code drive Estonia’s top score in 2020:

It has a 20 per cent tax rate on corporate income (reduced to 14 per cent in case of regular dividends) that is only applied to distributed profits. This means that Estonia’s corporate income tax system allows companies to reinvest their profits tax-free.

It has a flat 20 percent tax on individual income. The tax is not applied in case of distributed dividends that have already been taxed with a corporate income tax (see above).

Its property tax applies only to the value of land, rather than to the value of real property or capital.

It has a territorial tax system that exempts 100 percent of foreign profits earned by domestic corporations from domestic taxation, with few restrictions.

A simple tax system means less hassle.

A clear advantage of Estonia’s tax system is that companies spend less time on tax compliance than they would in any other country in the OECD. For example, in an average OECD country, companies to comply with just corporate income taxes use 42 hours per year. In Estonia, the figure is five hours. The report also stresses that other taxes, such as the value added tax (VAT) also have a low compliance burden.

Estonia is also among the few countries in the OECD that do not have any property transfer taxes, meaning taxes on the transfer of real property (real estate, land improvements, machinery) from one person or firm to another.

Low marginal tax rates create a competitive tax code

Although Estonia’s population is just 1.325 million people as at 2019, some format can still be adopted, if Nigerian government is sincere.


Corruption, lack of adequate and qualified tax personnel, poor government supervision, lack of revenue court, lack of data management, multiplicity of taxes, non-remittance of PAYE deductions, and tax evasion and avoidance.

System of Tax Administration in Nigeria could be said not to be working, as almost every sector were guilty of evading tax, and Regulatory and enforcement agencies were also culprit of negligence, until the year 2000 when revenue generation drive of Lagos State under former governor Bola Tinubu discovered the untapped potential of tax administration. This began the Awakening of task revolution in Nigeria states, report from former MD of Alpha beta showed that tax income of Lagos State moved from 39bn to over 300bn during the tenure of that regime.

Lagos State tax revolution story suddenly became a motivating factor for under states that suddenly discovered the avenue to boost their revenue. How far has it feared and what has become the story for other states to emulate?

According to the Tax Foundation, the structure of a country’s tax code is an important determinant of its economic performance.

A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities. A competitive tax code is one that keeps marginal tax rates low.

In today’s globalized world, businesses can choose to invest in any number of countries throughout the world to find the highest rate of return. This means that businesses will look for countries with lower tax rates on investment to maximize their after-tax rate of return.

If a country’s tax rate is too high, it will drive investment elsewhere, leading to slower economic growth. In addition, high marginal tax rates can lead to tax avoidance. According to research from the OECD, corporate taxes are most harmful for economic growth, but with Nigeria, complex tax structure, we are still far from our destination.

With the government expecting more from taxes in the 2021 budget? there will be the thought, whether Nigeria is trying to justify that it has low tax system, when compared with Finland with one of the high tax net in the world, yet, no basis for comparison because the tax is working for the citizens as they  have free education,  health care and good business environment for investment to thrive which cannot be said of Nigeria.

Also with ongoing reforms on the tax laws for this long, and sent to the national Assembly in July 2020 is  still questionable.

The law, which is the first major reform to the companies law in Nigeria since 1990 introduces some key changes including:

Insolvency provisions to help companies in distress

Restriction on the number of public companies in which a person can serve as a director

Ability of an individual to form a single-shareholder company

Replacement of authorized capital with minimum share capital

Electronic filing,  virtual meetings and electronic share transfers.

The tax legal framework is yet to pick up, looking at the digital economy, no legal tax framework to see how the revenue generation is addressed.

Challenges also with a robust database of taxpayers, cannot also be swept under carpet, likewise the National population census figures are not equally available which affects the tax system.

A reliable   data base will help to know how much we can generate, coupled with multiplicity of tax between FIRS and state government , likewise states versus local government as well as MDA’s like development control and town planning in the property sector and overlapping sectors, likewise with vehicle coverage in Nigeria.


The current economic challenges have widened the budget deficit of governments at all levels as both revenue from oil and taxes have dwindled. Ironically, it is also the time when the government needs to spend more to provide palliatives, tax concessions and support to vulnerable persons and businesses.

Given the unusual situation, the government needs to be deliberate in implementing tax measures and fiscal policies. The overall objective should be to generate revenue in a manner that does not hamper economic recovery. On the other hand, taxpayers need to pay attention to their tax affairs to ensure compliance at the least possible costs while managing their tax risks for long-term sustainability.


A chartered accountant with chrome group of company, Anthony Ekwueme calls for streamlining collection mechanism, ensuring good, effective and efficient tax administration, introduction of tax technology, tax awareness and communication, simplifying the tax laws and abolishing some, refund of taxes overpaid, independent of tax authorities ,addressing the issue of corruption among tax officials, strengthening of tax audit, establishing special courts to handle tax issues, and stiffer penalty for tax evasion and other tax offences, but also skeptical if these can be achieved given the present state of economic decay.

A senior lecturer at Lagos Business School in one of his contributions to the economy advised the government further stated that Nigeria is doing badly in terms of mopping up revenue to finance its budget as well as sustain the economy of the country.

“‘It is not just about raising the fund, it is about setting in process, setting appropriate and efficient mechanisms to ramp up the revenue collection ability of the government.

For Greg Ohiani, a chartered accountant and a trained tax officer, He explained that so it is obvious there is also a need for reform with the Federal Inland Revenue services, not just to keep compensating themselves but to also work to ensure that remittance genuinely goes into the government purse.

He further explained that the new tax bill of 2019 and CAMA 202O is set to help business thrive in Nigeria.

The Nigeria tax system is involved and needs to meet up to standard.

He also calls for the need to monitor tax consultants and Federal Inland revenue.

If remittance will go to the appropriate purse.

He calls for the need to look into property tax with a solid tax property reform for it to generate more revenue from the rich because the tax system does not really milk the rich to generate more to the government purse.

He equally called for surveillance units to monitor tax administrators and remittance and whatever is happening.

Niyi Adesanya, a tax consultant deviated a little by blaming tax evaders and defaulters and that with the new tax law should be followed strictly to deter tax defaulters why government should also work to ensure enforcement for penalty on tax defaulters and not only to leave the blame game at the door step of the government .

Further calling for training and retraining of tax officers as most of them are not equipped with modern tax system

In a nutshell, experts say there is need to block the wide and loose  tax basket which has a wide hole and cannot keep any remittance to use in building social infrastructure, the need to fix round peg in round holes and square peg in square holes starts by addressing the problem of tax evasion and all sharp prices ,harmonize tax system, educate taxpayers, transparency in tax system, tax officers to constantly declare assets to check corruption, a legal framework to expand the tax net to bring in the informal sector with the invasion of covid-19 and with its effect which has led to recession, there is need for strategize ,hence the government and citizens losses at the end of the day.

AYOADE OLATOKEWA IS THE NEWS EDITOR and presenter of “Talking Economy with Toke” on  KISS FM99.9,Radio,ABUJA. 

With Visualization support by ATUPA.


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