Tinubu’s reforms saved Nigeria from brink of collapse — Oyedele 

Chairman of the Presidential Committee on Tax Policy and Fiscal Reform, Mr Taiwo Oyedele, has stated that the economic reforms initiated under President Bola Tinubu’s administration rescued Nigeria from imminent financial collapse and laid the groundwork for long-term recovery.

Speaking in Lagos on Wednesday at the inaugural Annual Workshop for Attorneys-General on emerging issues in the communications sector, Oyedele said the reforms were not solely aimed at boosting government revenue, but were designed to restructure the economy and avert a crisis similar to those experienced by Venezuela, Zimbabwe, or Sri Lanka.

He recalled that prior to May 2023, the nation was grappling with severe economic distress, including high trade deficits, negative balance of payments, and unsustainable debt service levels. “At the end of 2022, 97 per cent of government revenue was spent servicing debt,” he said.

According to him, Nigeria had been on the edge of economic disintegration, drawing parallels with the experiences of Venezuela, Zimbabwe, and Sri Lanka. He attributed much of the strain to the previous administration’s policy of printing over N30 trillion to fund recurrent expenditure.

“We were at the tipping point. Within a year, without urgent reform, the system would have completely collapsed,” he stated.

Oyedele pointed to clear progress made since the reforms were introduced, including a reversal from trade deficits to trade surpluses, a positive balance of payments, and the clearance of over $7 billion in outstanding foreign exchange obligations.

He disclosed that the tax-to-GDP ratio has risen to 13.5 per cent in just two years, and the proportion of government revenue spent on debt servicing has dropped from nearly 100 per cent to below 50 per cent in the same period.

While acknowledging that such macroeconomic indicators may not yet reflect in the daily lives of ordinary Nigerians, Oyedele likened the process to planting a tree. “The roots must be strong before the fruits can appear,” he said.

He described the reforms as people-centred, with the intention of ending the practice of taxing poverty. He said they are designed to promote economic growth and boost efficiency in tax administration. “Pursuing revenue generation before revitalising economic activities is like placing the cart before the horse,” he added.

Several measures have already taken effect, including a reduction in withholding tax rates. Telecommunications infrastructure providers now pay two per cent instead of 10 per cent, and the levy has been scrapped entirely for manufacturers to improve liquidity in the sector.

He also noted that the reforms have raised exemption thresholds for small businesses. Data shows that only the top three per cent of Nigeria’s informal sector can realistically pay taxes, leading to the official exemption of the remaining 97 per cent.

Other elements of the overhaul include a more progressive tax structure affecting income tax, value-added tax, and capital gains tax, along with the removal of levies on investment income and capital. Incentive schemes have been streamlined, and efforts are underway to harmonise taxes collected at the federal and federally-administered levels.

While progress has been made, Oyedele acknowledged that harmonisation at the subnational level remains ongoing. New legislation now provides that the Federal Inland Revenue Service will oversee company taxes, while State Internal Revenue Services will handle personal taxation within their jurisdictions.

He also addressed ongoing concerns around personal income tax. According to Oyedele, low-income earners are now fully exempted from Pay-As-You-Earn (PAYE), the middle class face reduced rates, and high earners contribute slightly more, reflecting a fairer and more balanced structure.

On the issue of excessive taxation, Oyedele criticised the existence of over 60 federal agencies involved in tax collection, describing the situation as globally unprecedented. He said the telecommunications sector in particular is burdened by multiple and overlapping levies.

He disclosed that a proposal has been submitted to the National Assembly seeking constitutional amendments to eliminate certain taxes collected by local governments—such as produce tax, bicycle tax, and wheelbarrow tax—which he described as ineffective and burdensome.

“I strongly believe that if a government agency has the power to collect a tax, it also has the discretion not to collect it, especially where the tax causes more harm than good,” he said.

Calling for broad-based support, Oyedele appealed to Nigerians to regard the tax reform initiative as a collective responsibility that holds long-term benefits for the entire country.

“The worst is behind us,” he said. “However, while a firm legislative foundation has been laid, full implementation remains vital.”

He concluded by encouraging stakeholders to deepen their understanding of the reforms to avoid misinterpretations and to contribute meaningfully to national recovery.