2026 Tax Reforms: Opportunity or test of trust? analysts warn accountability key to success

Millions of Nigerians are watching closely as the federal government begins rolling out its ambitious 2026 tax reforms, designed to make the country’s fiscal system fairer, simpler, and more growth-oriented.

While policymakers and reform advocates hail the changes as pro-poor and business-friendly, experts caution that Nigeria’s long-standing trust deficit between citizens and the state may ultimately determine the reforms’ success.

The new regime, which came into effect on January 1, 2026, under the Nigerian Tax Act and the Nigerian Tax Administration Act, introduces sweeping changes in both personal and corporate taxation. Key provisions include: Workers earning below N800,000 annually are exempt from personal income tax.

Basic food items, healthcare, education, and public transportation are removed from the VAT net.

Small companies with turnovers of N100 million or less are exempt from corporate income tax, capital gains tax, and the new development levy.

Multiple tax laws are consolidated into a unified code to reduce duplication, complexity, and harassment.

According to Dr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, the reforms are “deliberately pro-poor, aimed at reducing the burden on low-income earners, while encouraging small businesses to thrive.”

Optimism tempered by skepticism

Yet behind the optimism lies skepticism rooted in decades of perceived fiscal mismanagement. For many Nigerians, paying taxes is not the primary issue; rather, it is whether the government has earned the moral authority to demand them.

“The challenge in Nigeria has never been about tax rates alone,” said Prof. Amina Balogun, an economist at the University of Lagos. “It has always been about trust. Citizens must believe that their contributions translate into tangible public goods, from functioning hospitals to safe roads and quality schools.”

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The distrust is fueled by visible inequalities and reports of lavish lifestyles among public officials. Social media has amplified public scrutiny, making transparency a central demand. Despite constitutional mandates for welfare and accountability and Nigeria’s participation in global initiatives like the Extractive Industries Transparency Initiative (NEITI), citizens still perceive a gap between revenue collection and social investment.

Taxation as lived experience

For ordinary Nigerians, taxation often feels like an added burden rather than a shared civic responsibility. Many still rely on private solutions for basic services such as electricity, water, security, healthcare, and education.

Take the experiences of Mr. George, a salaried worker, who faces monthly PAYE deductions while paying for generators, private schooling, and security services. Meanwhile, Mr. Kunle, a small business owner, avoids voluntary tax payments due to perceived government failures in service delivery.

According to the International Monetary Fund (IMF), only about 10 million Nigerians out of a labor force of 77 million are formally registered taxpayers. Experts link this low compliance not just to ignorance, but to a broken social contract.

Global lessons and local challenges

Countries like Sweden maintain high tax-to-GDP ratios because citizens see visible returns in public services. In China, targeted deductions for healthcare and education have increased compliance by linking taxes to tangible social benefits.

Experts argue that Nigeria does not need to copy these systems verbatim, but should embrace the underlying principle: fairness and transparency drive voluntary compliance.

The recent controversy over the Federal Inland Revenue Service’s appointment of Xpress Payments Solutions Limited as a Treasury Single Account collecting agent underscores the fragility of public trust.

Critics warn that concentrating sensitive revenue functions in private hands without sufficient safeguards could replicate past failures of revenue mismanagement. Former Vice President Atiku Abubakar described the move as potentially “nationalizing revenue collection in opaque ways,” while the NRS insists that Xpress is only an additional option, not a gatekeeper.

“The 2026 tax reforms could mark a turning point,” said Dr. Ifeanyi Okoro, a public finance specialist. “But reform without accountability risks repeating old mistakes. Transparency in revenue use, strengthened oversight institutions, and consistent public communication are essential.”

Civil society voices echo this sentiment. Organizations like ActionAid Nigeria and leaders including Rotimi Amaechi emphasize that responsible, people-oriented governance is critical if the reforms are to achieve voluntary compliance.

At its core, the debate is moral. Taxes are a contract: citizens surrender part of their income in exchange for security, infrastructure, and essential services. When this exchange fails, taxation feels coercive rather than participatory.

“If citizens see roads fixed, hospitals functioning, schools improving, and security strengthened, compliance will follow—not because they are forced, but because the system finally makes sense,” Prof. Balogun added.