“I am not going to tax poverty. I want to tax prosperity.”
That is a bold promise from the Nigeria Revenue Service Chairman, Dr. Zacchaeus Adedeji. As the new tax laws kick in this January, he is trying to convince Nigerians that the government can make more money without punishing the common man.
His argument is simple: He claims 95% of poor people are completely safe from these new taxes.
How is that possible?
The Chairman explained it like this: If you check the spending of an average low-income earner, about 90% of their money goes to two things: Food and Transport.
To help the poor, the new law has removed VAT (Value Added Tax) from:
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All food items.
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Transportation costs.
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Basic essential goods.
The logic is straightforward: If the government stops taxing the food you eat and the bus you enter, your cost of living should technically go down, or at least stay stable, even if big companies are taxed more.
The Problem: Theory vs. Reality
On paper, this sounds fantastic. But every Nigerian knows that our market doesn’t always follow the textbook.
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The “Sticky Price” Problem: In Nigeria, when prices go up, they fly like a jet. When costs go down, they crawl like a snail. Even if the government removes the tax on transport, will the bus driver reduce the fare? Probably not immediately.
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The Filing Headache: There is also a new rule that says everyone must “file returns” (declare their income) every year. The Chairman calls it a civic duty. But for a small business owner trying to survive, hearing about a ₦100,000 penalty for not filling a form is scary.
What Should You Expect?
Dr. Adedeji is asking for patience. He believes that by 2026, we will see the benefits. He says the new system is designed to tax “Returns” (profit) and not “Investments” (the money you use to start a business). This is actually good news for small businesses; it means you shouldn’t be taxed heavily until you actually start making money.
READ ALSO: Taxing Right or Taxing More? The Truth About VAT on Bank Transfers
Editor’s Note
The government has promised that this new system will protect the poor. The exemptions on food and transport are a great step. But for the average Nigerian, the proof isn’t in the speech, it is in the price of rice and the cost of a Danfo ride. We are watching.
