Abstract
Why do Nigerian, evade tax? The usual answer blames weak enforcement and a fragmented administrative system. This essay makes a different case: the real problem is trust, not detection. Most taxpayers do not withhold payment because they think they can get away with it; they withhold it because they doubt the money will be spent honestly, shared fairly, or accounted for at all. Using the “slippery slope” framework of tax compliance alongside Nigeria’s newly consolidated 2025 tax reforms, this essay shows the reforms have modernised how tax is collected while leaving the harder question, “what happens to it afterwards?”, largely untouched.
Three problems sustain this trust gap: taxpayers cannot trace their money to any visible benefit, they experience overlapping informal levies indistinguishable from extortion, and rising collection figures have not been matched by rising confidence and trust in government. In response, the essay proposes six concrete, legally grounded reforms, including a statutory taxpayer charter, mandatory revenue-to-expenditure reporting at the local government level, and a Joint Revenue Board with real enforcement teeth. The essay also submits that Nigeria’s reforms have not yet earned the trust of its taxpayers and without it, they will keep falling short.
Introduction
Nigeria’s tax-to-GDP ratio climbed from roughly 10% to about 13.5% by late 2024.[1] This is an improvement, but it still sits below the sub-Saharan African average[2], and falls short of the government’s 18% target for 2030.[3] The usual explanation is administrative: fragmented collection machinery across federal, state, and local layers.
This essay argues that Nigeria’s compliance problem is, at its core, a trust problem. People avoid paying tax because they have little reason to believe that what they pay will be spent honestly, shared fairly, or accounted for at all. Fixing compliance requires more than stricter collection; it requires making the link between taxation and public benefit visible and credible.
The 2025 tax reform Acts offer Nigeria a vital opportunity to achieve this. But as this essay shows, modernising how tax is collected will not, by itself, close the trust gap, since doing so requires accountability measures with real legal teeth, not just administrative efficiency.
Conceptual Framework: Deterrence versus Trust
The Allingham–Sandmo model defines tax compliance through a rational choice lens: Taxpayers weigh the probability of detection against the financial benefits of evasion. On this view, compliance is driven primarily by audits and penalties. Nigeria’s tax administration has long leaned on this logic, and the 2025 reforms keep plenty of enforcement teeth, including wider third-party reporting rules requiring banks and other financial institutions to flag qualifying customer transactions to the tax authority.
But this only tells half the story. Behavioural scholarship, through the ‘slippery slope framework’, argues that compliance rests on two pillars: state coercive power and citizen trust. Where trust runs high, compliance becomes something people do on their own, without much nudging from government.
Where trust runs low, even heavy-handed enforcement buys only grudging, minimal compliance, and often pushes economic activity further underground to dodge scrutiny altogether. For Nigeria, this distinction is not academic. A large share of the economy sits outside the formal system, and no tax authority, however well-resourced, can realistically audit its way to broad compliance across a base this size and this dispersed. The state has to earn voluntary compliance rather than merely enforce it, and earning it depends chiefly on how credible the state looks as a steward of the money it collects.
Nigeria’s Legal and Institutional Framework
Any discussion of Nigeria’s fiscal architecture has to start with the Constitution, which splits taxing powers between the Federal Government and the States through the Exclusive and Concurrent Legislative Lists.[4] This split has produced a layered system, and layered systems tend to produce jurisdictional friction, which, in practice, means ordinary taxpayers are often unsure who has the right to tax them for what.
On 26th June 2025, President Bola Ahmed Tinubu signed four landmark statutes into law: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act,5 which together repeal and fold more than a dozen fragmented tax laws including the Companies Income Tax Act, the Personal Income Tax Act, the Value Added Tax Act, and the Capital Gains Tax Act into one modernised regime, effective 1 January 2026.
Four things about this reform matter for the trust argument specifically. First, the Nigeria Revenue Service (NRS) takes over from the Federal Inland Revenue Service as the main federal tax authority, and the Joint Revenue Board Act creates a legal mechanism for federal and state revenue agencies to coordinate and resolve disputes, speaking directly to the “multiple taxation” complaint that has poisoned taxpayer goodwill for years.
Second, the NTAA reworks how VAT revenue is shared: 10% to the Federal Government, 55% to the States, and 35% to Local Governments, with the sub-national portion split by equality (50%), population (20%), and where consumption happened (30%).[5]
It is a fairer design that could reconnect local collection with local revenue in the public mind, but only if people know the link exists. Third, the personal income tax exemption threshold has been raised, so anyone earning ₦800,000 or less a year now owes nothing, while rates climb to 25% above ₦50 million.[6]
This targets Nigerians who earn too little to owe formal tax yet still bear the brunt of informal levies daily. Fourth, previously separate levies like the Tertiary Education Tax, the National Information Technology Development Levy, the NASENI levy, and the Police Trust Fund levy, have been merged into one 4% Development Levy on assessable profits,[7] cutting both paperwork and the sense of being taxed from every direction at once.
These are real structural changes, but none touches the other half of the equation: what happens to the money once collected. Two instruments already exist that could close that gap, and both are underused. The Fiscal Responsibility Act 2007 requires transparency in how the federal budget is prepared and executed,[8] and the Freedom of Information Act 2011 gives citizens a statutory right to request information from public bodies.[9]
Nigeria has poured its reform energy into collection law while largely ignoring expenditure-accountability laws. The 2025 reforms are necessary, but on their own not enough to rebuild trust. They modernise how tax gets collected, but leave accountability where it was.
Diagnosis: Examining why trust remains low
Three factors, working together, explain why legal reform has not translated into voluntary compliance, and each points to a different kind of fix.
First, taxpayers rarely see a clear link between their payments and tangible public benefits, particularly at state and local levels where compliance with the Freedom of Information Act remains inconsistent. Without that visible chain from payment to development, tax feels like extortion, no matter how well-drafted the underlying law is.
The second is the everyday reality of “multiple taxation.” Beyond the formal overlaps the Joint Revenue Board Act is meant to fix, ordinary Nigerians regularly run into informal levies collected by touts, non-state actors, and overlapping local government agencies whose authority is, at best, loosely grounded in law. This shapes public attitudes towards taxation far more than any federal statute does, because it is the point of contact most citizens actually have with “the government.”
The third is the persistent perception of corruption, even as tax collection continues to rise. FIRS collections rose from ₦12.3 trillion in 2023 to a record ₦21.7 trillion in 2024, a 76% increase surpassing government targets.[10] But trust has not risen with it, because public services have not visibly improved at the same pace.
When citizens watch revenue climb while roads, power, and healthcare stay unchanged, the natural conclusion is that government is better at taking than giving. Layered on top is a comprehension problem: recent survey data show sharp regional gaps in basic tax policy awareness across Nigerian states with Kogi recording the highest awareness at 96.8% and Abia the lowest at just 1.4%[11]. A citizen who does not understand what a tax is for, or where it ends up, cannot voluntarily comply.
The Way Forward: Strategies for Strengthening Public Trust and Accountability
The recommendations below are practical, each written to attach to a specific provision of Nigerian law, rather than stand alone as a mere suggestion.
1. A statutory taxpayer charter with service standards that actually bite
Nigeria should legislate a Taxpayer Bill of Rights, folded into the NTAA or passed as standalone law, setting out specific NRS service commitments such as assessment speed, refund timelines, complaint resolution, backed by a real remedy when broken, such as automatic interest on late refunds or a right to escalate a service failure to the Tax Appeal Tribunal.
This is not experimental because comparable taxpayer charters already exist in jurisdictions such as South Africa, Canada and the United States, where they clearly define taxpayers’ rights, administrative obligations and available remedies against revenue authorities[12]. A right that comes with no way to enforce it is just a promise.
2. Mandatory revenue-to-expenditure reporting at the sub-national level
Building on the NTAA’s improved VAT-sharing formula, states and local governments receiving VAT allocations should be legally required, as a condition of receipt, to publish, on a regular schedule, exactly how revenue was spent locally, in a standard, accessible format. This applies the Fiscal Responsibility Act’s transparency requirement at the level where citizens actually experience government.
3. Bringing the informal sector into the system through visible, short-cycle reciprocity
Rather than treating informal traders mainly as enforcement targets, the NRS should pilot low-burden, presumptive tax regimes tied to something the trader can actually see, for instance, ring-fencing a share of presumptive tax collected in a market for that market’s own sanitation or security, run jointly with market associations. Rwanda’s tax administration, for example, has combined taxpayer education, simplified compliance procedures and visible improvements in public services to strengthen voluntary compliance.[13]
4. Give the Joint Revenue Board real teeth as a dispute-resolution body, rather than allowing it to remain a dormant coordinating body. It should be required to publish annual, state-by-state reports on multiple-taxation complaints received and resolved, giving citizens a way to check whether the reform’s central promise is being kept in practice.
5. Holding the NRS to the same disclosure standard it demands of taxpayers, including a public dashboard tracking Freedom of Information Act requests and responses. An authority that insists on transparency from citizens while staying opaque itself will struggle to be believed, because legitimacy is largely a two-way street.
6. Targeted civic tax education aimed at the states with the weakest measured awareness, using documented gaps between states as a map for where tax education spending would render the most benefit.
For comparison, Rwanda’s investment in digital tax infrastructure has been credited with measurable gains in compliance, illustrating how transparency-oriented reform can move the needle even without Nigeria’s scale of informality.[14] The lesson for Nigeria is the deliberate pairing of collection reform with visible reciprocity, something the 2025 reforms have only half achieved on the collection side, and not yet touched on the expenditure side.
Conclusion
The Nigeria Tax Reform Acts of 2025 represent the most ambitious restructuring of Nigeria’s tax system in decades. They simplify tax administration, improve coordination and make the tax regime more equitable. But efficiency alone will not get citizens to comply voluntarily. Citizens must also be convinced that the revenue collected is managed transparently and translated into tangible public value.
Sustainable tax compliance therefore depends not merely on the state’s ability to collect taxes but on its willingness to demonstrate accountability for every naira collected. Nigeria has rewritten how it collects tax. But whether it can convince a trader in Onitsha or a civil servant in Kaduna, to trust the tax system is a different question entirely.
Reference
[1] ‘Can Nigeria Hit Revenue Targets without Asking Taxpayers for more?’ BusinessDay (Lagos, 27 June 2026)
[2] ‘How Nigeria raised tax revenue by 49% through May 2026’ Ecofin Agency (Abidjan, 3 June 2026)
[3] Taiwo Oyedele quoted in ‘FG targets 18% Tax-to-GDP ratio in Three Years – Oyedele’ Punch (Lagos, 27 June
2025) <https://punchng.com/fg–targets–18–tax–to–gdp–ratio–in–three–years–oyedele/> accessed 11 July 2026
[4] Constitution of the Federal Republic of Nigeria 1999 (as amended), Second Schedule, Pts I–II. 5Nigeria Tax Act 2025 (NTA); Nigeria Tax Administration Act 2025 (NTAA); Nigeria Revenue Service (Establishment) Act 2025; Joint Revenue Board (Establishment) Act 2025.
[5] NTAA (n 5)
[6] NTA (n 5)
[7] NTA (n 5)
[8] Fiscal Responsibility Act 2007.
[9] Freedom of Information Act 2011.
[10] ‘FIRS Exceeds 2024 Revenue Target by N2.2 trillion’ The Guardian (Lagos, 30 January 2025)
[11] ‘Nigeria’s Tax-to-GDP Ratio has consistently lagged behind compared to regional averages’ Intelpoint (12 November 2024) <https://intelpoint.co/insights/nigerias–tax–to–gdp–ratio–has–consistently–lagged–behind–comparedto–regional–averages/> accessed 12 July 2026
[12] ‘The Taxpayer Bill of Rights’ LawNow
[13] G Mascagni and others, ‘Teach to Comply? Evidence from a Taxpayer Education Programme in Rwanda’ (ICTD, Institute of Development Studies)
[14] L Rossel, F Santoro and N Hakizimana, ‘Technology Evolution and Tax Compliance: Evidence from Rwanda’ (ICTD Research in Brief 99, Institute of Development Studies 2023) DOI: 10.19088/ICTD.2023.048
Author
Amos Stephen Bwala writes from Faculty of Law, ABU Zaria (500L). He can be reached at: 07066334459, OR [email protected]