Frank Okon

Nigeria’s sweeping overhaul of its tax system is drawing growing criticism from analysts who warn that imposing more stringent tax laws in a fragile economy could worsen business attrition, fuel inflation, and delay economic recovery.

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While President Bola Tinubu has described the reforms as a “once-in-a-generation” opportunity to strengthen the country’s fiscal base, critics argue that the timing and scope of the measures risk placing excessive pressure on businesses already struggling with weak demand, high operating costs, and limited access to credit.

The four new tax laws significantly expand who and what can be taxed, resetting income thresholds, introducing taxes on savings interest, and widening the tax net to capture more of the working population. Analysts say these measures, rather than boosting productivity, could accelerate the closure rate of small and medium-sized enterprises, many of which operate on thin margins and are highly sensitive to additional costs.

Concerns are also being raised about the impact on prices. Higher taxes on businesses and investors are likely to be passed on to consumers, potentially triggering sharper inflationary spikes in an economy already grappling with rising food and energy costs. This, analysts warn, would further erode household purchasing power and suppress consumer demand.

As businesses scale down or shut their doors, job losses could mount, worsening unemployment and pushing more Nigerians into poverty. The ripple effects, critics argue, could undermine efforts to stabilise the economy, as lower employment and weaker consumption reduce overall economic activity and tax revenue in the long run.

Some analysts caution that without parallel reforms to improve infrastructure, ease regulatory bottlenecks, and support private sector growth, tougher tax enforcement may prove counterproductive. Instead of expanding the tax base sustainably, they warn the new laws could shrink it by stalling business formation and slowing Nigeria’s recovery from prolonged economic stress.