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| Source: Atlanticpost.ng |
When Taiwo Oyedele tells Nigerians that “every individual must file tax returns by March 31”, the headline sounds like another compliance sermon. This occurs in a country fatigued by rules that rarely feel reciprocal. Yet the warning is significant. It not only tightens the legal spotlight on millions of employees and small businesses, but it also exposes the unresolved tension at the heart of Nigeria’s fiscal debate.
That tension is simple. The state wants more revenue. Citizens want relief. The economy is still bruised by inflation, weak purchasing power, and stubborn unemployment. It cannot absorb a tax conversation that is framed as punishment for survival.
That last claim is the most politically explosive. Even the best resourced states struggle to get a small fraction of taxpayers to file returns. Therefore, Nigeria’s tax problem is not merely a rate problem. It is a trust problem, a systems problem, and a governance cost problem.
What the Law Demands and What Citizens Hear
Nigeria’s personal income tax framework has long required returns. This includes individuals outside formal PAYE structures. It also applies to those under direct assessment regimes. The compliance culture, however, has lagged behind the law.
This gap fuels a recurring misunderstanding. Filing a return is not automatically the same thing as paying more tax. In many countries, filing is how a taxpayer confirms income. They also claim lawful reliefs and disclose additional earnings. Filing may also show they owe nothing. Filing is also how a revenue authority builds data that improves targeting and reduces arbitrary demands.
But Nigeria is not many countries. Here, citizens hear “file” and translate it to “the taxman is coming”. This is because too often the state’s first instinct is extraction, not service. People fear that a compliance drive will become a backdoor rate hike. They worry it may become much worse, opening a door to harassment, multiple taxation, and discretionary enforcement.
That fear is not irrational. It is learned behaviour.
The Economy Cannot Take a “Just Pay More” Moment
Any serious tax conversation in early 2026 must start with the economic weather Nigerians live in.
Households are still recalibrating after a prolonged cost of living squeeze. Businesses, especially SMEs, are juggling volatile demand, expensive credit, and higher operating costs.
Broad consumption linked levies create more regressive pressure. Aggressive enforcement of low value personal taxes often hits lower income earners harder. This is because they cannot structure income or hire advisers.
So the question is not whether Nigeria needs revenue. It does. The question is whether the state is choosing the cheapest and most sustainable way to raise it.
The Real Problem Is Not Nigerians, It Is the Incentive Structure
Nigeria’s tax to GDP ratio remains low by continental standards. But low tax effort is only one part of the story. The other part is the structure of incentives in governance.
Citizens watch large recurrent spending, expanding administrative footprints, and public sector overheads that rarely shrink even in crisis. They see debt service and salaries consuming enormous shares of revenue. Then they are told to file returns and brace for tighter enforcement.
Trap
Nigeria’s fiscal structure has a visible pattern. Recurrent commitments are sticky. Debt service is rising. Capital spending is often promised but delayed or under delivered. In that mix, the state’s incentive becomes to chase quick revenue rather than undertake painful restructuring.
This creates a trap.
When the state does not reduce governance costs, it needs more revenue just to stand still. More revenue demand triggers more pressure on citizens. Pressure triggers evasion and political resistance. Resistance reduces collections. Then the state borrows more. Debt service rises. And the cycle repeats.
Breaking this cycle is the central economic argument against increasing the tax burden in a hard moment. Nigeria does not need a bigger tax burden first. It needs a more credible state first.
What a credibility plan would look like
A serious cost of governance reset would include measures that are politically difficult but economically unavoidable:
Rationalising duplicative agencies and mandates If several entities perform overlapping functions, citizens will not accept higher taxes to fund inefficiency. Transparent procurement and spend discipline Publish contract data and enforce value for money. Leakage is a hidden tax on everyone.
Payroll and pension integrity Cut ghost workers, enforce biometric verification, and prosecute fraud consistently. Public office cost limits Caps on certain recurrent perks, travel, and administrative overheads send a signal that sacrifice is shared.
Without reforms like these, it is fiscally lazy to ask citizens to carry more tax weight in the middle of hardship. It is also politically dangerous.
The Comparative Lesson From Other Countries
Nigeria is not alone in insisting that citizens file returns. Many countries treat filing as routine civic hygiene, including for employees whose taxes are withheld at source.
The difference is how filing is experienced.
In Kenya, the emphasis has been digital filing, clear deadlines, and penalties that are predictable rather than arbitrary. Compliance is framed as normal, not adversarial. In South Africa, filing seasons are communicated as national routines, supported by e filing systems and structured taxpayer categories.
In Ghana, the revenue authority publishes guidance on who should file. It specifies what returns apply. They set time-bound expectations that are easier to plan for.
Nigeria’s emerging lesson is clear. Enforcement alone does not deliver compliance. Process does.
If filing is hard, confusing, or seen as a gateway to harassment, compliance will remain low. This will happen no matter how often deadlines are announced.
What the New Tax Regime Changes and Why Incentive Disclosure Matters
Nigeria’s recent reform push includes new tax legislation and institutional restructuring designed to simplify administration and tighten transparency. One of the most telling policy shifts is the move toward stronger disclosure of tax incentives.
This matters because incentives, waivers, and sector specific reliefs can quietly drain revenue. At the same time, ordinary workers are pursued aggressively for small liabilities. If Nigeria is serious about fairness, it must be able to answer a basic question:
Who is paying, who is not paying, and why.
Requiring businesses enjoying incentives to disclose them in returns is a step in the right direction. It signals that the state understands the political optics of squeezing PAYE workers while large corporate reliefs remain opaque.
However, disclosure must not become another compliance burden that is enforced only against formal SMEs while politically connected beneficiaries skate.
For incentive disclosure to build legitimacy, it must be paired with:
public reporting of aggregate incentive costs periodic review of incentive effectiveness sunset clauses that force renewal only if jobs and investment targets are met equal enforcement across sectors, not selective enforcement
The Economic Case Against Raising the Burden Now
A conservative fiscal position accepts a hard truth. Nigeria must raise revenue over time. But the sequencing matters.
The best sequencing is:
Simplify and digitise filing so compliance becomes easier than avoidance Widen the base by formalising parts of the economy through incentives, not intimidation Cut governance waste visibly to build trust and moral authority Only then discuss rates where necessary, with protections for low income households and SMEs
The worst sequencing is the reverse. Raise pressure first, then promise reforms later.
In today’s environment, a push that feels like more tax pain will push more activity underground. That is how governments lose, even when they are technically right.
What Employers Should Do Before the Deadline
For employers, the key issue is risk management. The employer annual return is no longer a sleepy compliance box. It is becoming a data pipeline for enforcement, audits, and cross checking across institutions.
Employers should treat filings as a corporate governance issue:
reconcile payroll records with PAYE remittances ensure staff tax IDs and employee records are accurate document reliefs and deductions applied address contractor and gig worker classification issues maintain evidence of remittance and filings in case of dispute
For employers enjoying incentives, disclosure obligations require more than a tick box. Companies should map incentives claimed, confirm legal basis, and ensure internal sign off. Incentives are increasingly an audit trigger, not a shield.
What Individuals Should Do Without Panic
For individuals, filing should be approached as protection, not fear.
confirm PAYE deductions match payslips and employer remittances disclose any additional income streams where required keep simple records, especially for side businesses file on time even if the result is zero tax due seek clarification from state revenue portals where available rather than relying on informal intermediaries
The strategic point is this. A basic filing history reduces vulnerability to arbitrary demands later. This is especially important for professionals and freelancers. It is also crucial for those who expect to access credit, travel documentation, government contracts, or formal sector opportunities.
The Question Nigeria Must Answer Publicly
Oyedele’s March 31 message is a compliance call. But the political economy question behind it is bigger.
If Nigeria wants citizens to file and pay, citizens will ask:
Will government also cut and publish its own costs.
In a difficult time, that is the bargain.
Tax compliance cannot be preached as a civic duty while governance consumption looks like a lifestyle choice. The fastest route to a stronger tax culture is not higher burdens. It is credible restraint, visible efficiency, and fairness that citizens can measure.
Until that happens, every compliance push will be heard as a threat, not a reform.
FAQ: Questions Nigerians Are Asking
Is filing tax returns the same as paying more tax
No. Filing is reporting income and status. You may owe more, less, or nothing depending on your circumstances and lawful reliefs.
If my employer deducts PAYE, do I still need to file
The compliance guidance being emphasised by the fiscal reform committee is that employees must still file.
Why is government focusing on filing now
Because low filing rates weaken data, enforcement, and planning. Filing also helps authorities identify who benefits from incentives and who is outside the net.
What should government do to avoid backlash
Make filing easy. Protect low income earners. Widen the base. Enforce incentive transparency. Reduce the cost of governance in visible ways.
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