Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has repeatedly stated that a vast majority of informal sector workers in Nigeria are too poor to pay taxes. He has backed this assertion with data and has emphasized that the committee’s new tax laws are not designed to burden this demographic.
Key Points from Oyedele’s Statements:
- Poverty, Not Evasion: Oyedele has clarified that the popular belief that Nigeria’s untapped tax revenue lies in the informal sector is a misconception. He argues that more than 90% of operators in this sector, such as roadside vendors, vulcanizers, and wheelbarrow pushers, are merely struggling to survive and lack the financial capacity to pay taxes. He has stressed that their inability to pay is due to poverty, not tax evasion.
- “Don’t Tax the Seed”: Oyedele has used the analogy, “We should not tax seeds but wait for the fruits,” to explain the committee’s philosophy. The goal is to allow small businesses and low-income earners to grow to a point where they can legitimately afford to contribute to the tax system.
- Proposed Tax Exemption: The committee has proposed a new tax relief system that would legally exempt a significant portion of the informal sector from all taxes. While some reports mention a 95% exemption rate, others go as high as 97%, suggesting the proposed law is designed to free those with an annual income below a certain threshold (e.g., N25 million or less) from various taxes, including withholding tax, company income tax, and personal income tax for their staff.
- Focus on the Wealthy and Technology: Instead of chasing the poor, Oyedele’s committee has focused on making it more expensive for the wealthy and large businesses to evade taxes. The new laws are designed to improve accountability and transparency, and the committee has stressed the use of technology to identify high-income earners and track the flow of money. The reforms also aim to bring untaxed industries, such as digital entrepreneurs, content creators, and the entertainment industry, into the tax net.
- Rebuilding Public Trust: Oyedele has also highlighted that a core objective of the tax reforms is to rebuild public trust. He states that by making the system more transparent, fair, and progressive—with the wealthy paying more and the poor paying less—the government hopes to foster a culture of voluntary tax compliance.
