Civil Society Legislative Advocacy Centre, CISLAC, and OXFAM, have called for tax reforms to ensure a more equitable tax system to address the widening wealth gap in Nigeria.
The Executive Director, CISLAC, Auwal Rafsanjani made the call yesterday in Abuja during a media dialogue and launch of the Fair Tax Monitor Index/Wealth Taxation Report, themed Taxing the Rich.
Rafsanjani said that as Nigeria continues to confront deep socioeconomic challenges, with over half of the population living in poverty, the need for tax reforms to fund essential services has never been more pressing noting that Nigeria faces an annual financing shortfall of over $10 billion to meet its Sustainable Development Goals, SDGs.
He said, “Meanwhile, wealth is concentrated in the hands of a small elite, with tax evasion and avoidance eroding our fiscal capacity.
“A report jointly commissioned by the Federal Inland Revenue Service, FIRS and the Joint Tax Board, JTB, reveals that 99% of the super-rich in Nigeria evade taxes, with a compliance rate of just 0.035%. Out of over 115,000 High Net-Worth Individuals, HNWIs, in Nigeria—those earning at least N40 million annually—only 40 have been identified as tax compliant.
“This situation reflects not only a glaring inequity but also a missed opportunity for revenue generation.
By taxing just 4,690 of Nigeria’s wealthiest individuals, the government could generate N4.59 trillion annually—enough to more than double the nation’s health budget or reduce out-of-pocket health expenditures by 40%. These reforms are critical to building a fairer tax system that aligns with Nigeria’s developmental needs.
“Key Issue: Capital Gains Tax, CGT: Nigeria’s current CGT of 10% pales in comparison to peer countries like South Africa (18-21.6%), Ghana (15-35%), and Kenya (15%). These low rates, coupled with numerous exemptions, severely limit revenue generation from wealthy individuals and corporations.
“Regressive Taxation Policies: Recent hikes in Value Added Tax, VAT, from 5% to 7.5% have disproportionately affected lower-income households. It is critical that we address this imbalance by shifting towards progressive taxation—ensuring the wealthy pay their fair share while reducing the burden on the poor.
“Property Taxation: Revitalizing Nigeria’s property tax system will promote transparent land ownership and foster more accountable local governance.
Proper standardization and digitization of property records are essential.”
Speaking on Wealth Inequality, he said that wealth in Nigeria was starkly unequal, with the wealthiest 1% owning five times as much as the poorest 50%.
This disparity, he said, coupled with the weak enforcement of progressive taxes, leaves a huge gap in our revenue potential.
“Challenges and opportunities of Nigeria’s decentralized tax administration: While Federal Laws provide the framework for addressing tax compliance among High Net-Worth Individuals, HNWIs, each State holds the authority to enact its own legislation on tax administration, creating both challenges and opportunities for reform,” he explained.
He revealed that the success and failure of the Voluntary Assets and Income Declaration Scheme, VAIDS, expanded Nigeria’s taxpayer database by 36%, adding 5 million new taxpayers by 2018, but only achieved 20% of its revenue target, raising N70 billion ($193 million), largely due to inadequate data, insufficiently trained staff, and corruption.
He recommended that, “Establishing a Dedicated HNWI Unit: Like Uganda, Nigeria should create a specialized unit within the FIRS to track and audit HNWIs, utilizing data from financial institutions and property registries.Implement a Net Wealth Tax; A comprehensive annual wealth tax on fortunes exceeding $5 million, $50 million, and $1 billion could raise over $6 billion.
“Reform CGT: Raise the Capital Gains Tax to align with global best practices and eliminate exemptions that favor the wealthy.
“Progressive VAT Exemptions and Luxury Taxes: Exempt basic goods from VAT while introducing luxury taxes on high-end goods like private jets, luxury cars, and yachts.
Property Tax Reforms: Standardize property valuation and digitize land registries to improve tax collection.
Progressive Personal Income Tax, PIT, Reform: Fully exempt Nigerians earning below the minimum wage or less than N840,000 annually from PIT while raising the top tax rate to at least 40% for the top 1%.
“Introduce Inheritance and Gift Tax: Targeting estates exceeding N50 million, with a progressive tax rate, to ensure wealth redistribution. Renegotiate Double Taxation Agreements, DTAs: Strengthen Nigeria’s tax sovereignty by reviewing DTAs that disproportionately benefit multinational corporations and establishing a specialized DTA unit within the FIRS.”
He added that the time for change was now, and there was no room for delay. Nigeria’s tax system must evolve into a powerful tool for equitable development, compelling the wealthy to pay their fair share while easing the disproportionate burden on the most vulnerable adding that these discussions were critical, as they will chart the urgent actions needed to create a tax system that was fairer, more efficient, and fully transparent.
Also, John Makina, Country Director, Oxfam in Nigeria while emphasizing the need for critical tax reforms said: “The situation in Nigeria is alarming: while millions struggle to afford their next meal, the super-rich continue to amass riches without paying their fair share of taxes.”
He stated that the complexities in tax laws, coupled with a lack of transparency, enable this situation, depriving the country of crucial revenue needed to invest in social protection and initiatives aimed at reducing inequality.
Makina said, “This was a scenario we can no longer accept if we are genuinely committed to building a more equitable society.”
He disclosed that Nigeria ranks among the countries with the highest levels of income inequality in sub-Saharan Africa, with a small fraction of the population controlling the majority of the nation’s wealth adding that the country’s wealth Gini coefficient, a measure of income inequality, stands at 35.1, placing it 11th out of 16 West African countries and highlighting Nigeria’s severe economic divide.
“The economic situation in Nigeria is critical, with millions struggling to make ends meet as prices rise faster than wages, leaving many hungry and desperate. Over 133 million people—about 7 in 10—are facing hunger, with women and girls disproportionately affected, making up nearly 63% of the hungry population. In rural areas, less than 40% of households have access to electricity, severely limiting educational opportunities and access to healthcare.
“Women and girls bear a heavier burden of poverty, with a 35% literacy rate compared to 59.5% for men, and they have limited access to education and land ownership.
Implementing a progressive wealth tax could generate over $7.5 billion annually.
“This revenue would be sufficient to double the government’s current health budget or reduce household out-of-pocket health expenditures by 40%, significantly easing the financial burden on millions of Nigerians.
“To make matters worse, the country is on the verge of bankruptcy, with the poorest states, like Sokoto, suffering an 87% poverty rate, in stark contrast to just 4.5% in Lagos. The growing debt burden means that most of the national budget is spent on paying off loans instead of funding essential public services,” he explained.
