JUST IN: How Nîgerians will benefit from new tax regime _ FG

JUST IN: How Nîgerians will benefit from new tax regime _ FG

Contrary to the controversy earlier generated by the new tax regime, the Federal Government has disclosed its plan to exempt about one-third of the workforce across both the public and private sectors from paying personal income tax.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, explained that the measure was to ensure a fairer and more inclusive tax system. Under the new tax regime, low-income earners earning ₦100,000 or less per month will no longer be required to pay personal income tax from January next year.

According to him, the exemption would affect roughly one in every three workers nationwide, marking a decisive break from what he described as a long-standing practice of “taxing poverty.” The move, he added, is expected to boost workers’ take-home pay, strengthen household purchasing power and help ease the rising cost-of-living pressures being faced by millions of Nigerians.

“These are Nigerians who are barely surviving, yet we still tax them,” Oyedele said, while speaking with journalists in Lagos at the weekend. “Instead of taxing people who cannot meet their basic needs, we should be supporting them,” he declared.

Oyedele explains that the policy forms part of a broader overhaul of Nigeria’s tax framework, much of which, he says, dates back to colonial-era legislation that no longer reflects modern economic realities. He noted that many of the countries that originally introduced such tax systems had since reformed or abandoned them because they had become barriers to growth, productivity and investment.

Additionally, he said the reforms were designed to reduce the tax burden on middle-income workers, assuring that individuals earning between ₦100,000 and about ₦2 million per month will pay less tax under the new regime, effectively increasing their disposable income without any corresponding salary increase.

Oyedele dismissed the argument that Nigeria no longer has a middle class, noting that while the segment had shrunk over the years, it remained a critical pillar of economic stability that must be protected. “If you destroy the middle class, you weaken consumption, savings and long-term growth,” he said.

Oyedele further analysed that high-income earners, representing only about two percent of Nigeria’s working population, would shoulder a slightly higher share of the tax burden.

Specifically, he disclosed that a top personal income tax rate of 25 per cent would apply exclusively to individuals earning ₦120 million or more annually. The differential, he said, aimed at restoring balance and fairness rather than punishing success.

Oyedele noted that Nigeria ranks among the top 10 countries globally with the highest tax burden on businesses, despite its urgent need for domestic and foreign investment to drive job creation and reduce poverty.

“We are not the United States or China, where capital is abundant. “Nigeria is searching for investment, yet we operate one of the most complex and punitive tax systems in the world.

“To improve the business environment, the government has reduced the corporate income tax rate from 30 per cent to 25 per cent. In addition, small businesses with annual turnover below ₦100 million will now enjoy a zero per cent corporate tax rate. These measures are intended to encourage informal enterprises to formalise, expand operations and gain access to credit,” he said.

Oyedele also highlighted the problem of multiple taxations and the proliferation of tax-collecting agencies, including non-state actors, which have made compliance costly, confusing and prone to abuse. The reforms, he said, will repeal several major existing tax laws and replace them with a streamlined framework aimed at eliminating duplication and improving transparency.

He noted that misinformation had clouded public discourse around the reforms, pointing to false claims about inheritance taxes and exaggerated fears over tax increases. “People are entitled to informed opinions, not ignorance,” he said, urging Nigerians to engage with verified facts rather than speculation.

While stressing the need for reducing inequality among the citizenry, he linked Nigeria’s rising social tensions to widening income disparities, arguing that taxing low-income earners in an unequal society only deepens frustration and resentment.

“These reforms are about fairness, inclusion and growth. If we get the incentives right, businesses will grow, jobs will be created, and Nigeria will work better for everyone,” Oyedele posited.