CPPE: Why tax reforms face resistance

The Centre for the Promotion of Private Enterprise (CPPE) said that Nigeria’s newly implemented tax reforms were facing strong public pushback, as a result of deep-seated distrust in the government and lived experiences of recent economic policies.

Muda Yusuf, CPPE’s Chief Executive Officer, said successful implementation would depend on strategic execution rather than policy intent alone.

He said that “History shows that good policy doesn’t guarantee good outcomes.”

He, however, stressed the importance of careful timing given Nigeria’s fragile economic recovery.

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The reforms include tax exemptions for low-income earners and small businesses, plus VAT relief on essential services like education and healthcare.

Despite these pro-welfare measures, Yusuf noted that public resistance reflected “lived experiences” where previous policy changes, including fuel subsidy removal and forex adjustments, increased living costs without corresponding improvements in public services.

The informal sector, which employs millions of Nigerians operating on narrow profit margins, represents a critical challenge.

The CPPE report warned that mandatory filings and penalties could “criminalise informality” without gradual implementation.

Contentious provisions include quarterly reporting requirements for bank transactions exceeding ₦25 million, a proposed capital gains tax increase to 30 per cent, and a ₦500,000 rent relief cap that critics say ignores urban housing realities.

Yusuf recommended a “revenue-efficient” strategy focusing enforcement on large corporations and high-net-worth individuals who generate most tax revenue, while using incentives and education to bring informal businesses into the tax net.

With 2026 being a pre-election year, he cautioned against rushing reforms that could trigger political backlash and further erode public trust.

“Tax reform must evolve with the economy,” Yusuf said, urging a pragmatic approach to ensure long-term fiscal sustainability.

The CPPE analysis comes as the government advances its reform agenda amid persistent inflation and growing reform fatigue among Nigerian households and businesses. [With Inside Business report]