Frank Okon

A consumer advocacy group has called on the Federal Government to protect low-income Nigerians from the impact of proposed tax reforms by imposing heavier taxes on wealthy individuals and large corporations.

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The Coalition for Affordable and Regular Electricity (CARE) made the call through its National Coordinator, Mr. Chinedu Bosah, who said any new tax regime must be equitable, transparent, and democratically managed in the interest of workers and the poor.

Bosah welcomed proposals to exempt individuals earning below ₦250,000 monthly from personal income tax but warned that the exemption would be meaningless unless tax revenues are transparently used to improve the living conditions of ordinary Nigerians.

According to him, properly managed tax proceeds could fund basic amenities, mass job creation, and industrial development. However, he cautioned that the current approach to taxation risks deepening economic hardship.

“The new tax laws will undermine the purchasing power of ordinary people and increase government revenue that may only enhance the wasteful and corrupt lifestyle of the ruling elite,” Bosah said.

He argued that although the reforms may not directly affect electricity supply, they would significantly reduce electricity consumption as declining purchasing power limits consumers’ ability to pay their bills.

Bosah noted that the proposed tax laws do not increase operational costs, investment flows, or financing for power generation, transmission, or distribution projects. Instead, he said power companies continue to enjoy generous tax incentives.

“Some of these power companies, if not all, are enjoying one form of tax incentive or another,” he said. “There are no new taxes imposed on them, nor any increase compared to what they previously paid.”

Citing Section 187(j) of the Nigeria Tax Act, Bosah said major players in the electricity value chain are exempt from Value Added Tax (VAT), even as consumers continue to pay VAT on electricity bills.

He explained that electricity generated by Generation Companies (GENCOs) and supplied to the National Grid or the Nigeria Bulk Electricity Trading Company (NBET), as well as power transmitted by the Transmission Company of Nigeria (TCN) to Distribution Companies (DISCOs), is VAT-exempt.

“This exemption does not extend to electricity consumers who are already grappling with harsh economic realities and the rising cost of living,” Bosah said.

“We see no rationale for exempting big power companies from VAT while subjecting consumers to it. It amounts to criminal exploitation.”

Bosah also criticised provisions in the Tenth Schedule (Sections 166–202) of the Act, which he said grant tax holidays of between 12 and 20 years to many large corporations, depending on the sector, while ordinary Nigerians are compelled to pay taxes.

He accused the government of using taxation primarily to sustain what he described as an “opulent and wasteful lifestyle” of a small ruling elite.

“Those who barely pay tax but spend heavily to compensate for government failure to provide basic amenities are now being forced to pay more taxes,” he said. “Their purchasing power, including the ability to pay for electricity, will be further undermined.”

Bosah expressed scepticism that increased tax revenue would benefit ordinary citizens, citing past experiences. He recalled assurances by the Tinubu-led administration that savings from the removal of petrol subsidies would be invested in education, healthcare, and social programmes—promises he said were not fulfilled.

“Instead, Nigerians faced increased hardship, including hikes in school fees in unity schools and tertiary institutions, while education, healthcare, and basic infrastructure remain underfunded,” he said.

He warned that higher tax collection could follow a similar pattern, forcing workers to spend more out of pocket to cover gaps in security, education, healthcare, housing, and water provision amid soaring living costs.