This article explores the significance of reimagining taxation in Nigeria to foster the economic growth and development.

1. Re-Imagining
Taxation as a
Tool For
Economic
Growth In
Nigeria
Richard Oluwaseye Ojo
Re-Imagining
Taxation as a
Tool For
Economic
Growth In
Nigeria
Unlocking Nigeria’s path to wealth
through efficient taxation policies

2. This whitepaper was prepared by
Richard Oluwaseye Ojo
FCA, ACTI, CFE, CPFA, FCFIP, CFIP, ACA (ICAEW)
This whitepaper is licensed under a Creative Commons Attribution 4.0 International
License. You are free to share, copy, and adapt the content for any purpose, even
commercially, as long as you provide appropriate attribution to the original source.
Please include a reference to this whitepaper and acknowledge the authorship.
For more details on the terms of this license, visit
https://creativecommons.org/licenses/by/4.0/
January, 2024

3. Despite being one of the largest economies in
Africa, Nigeria faces several significant
challenges in its economy. According to the
National Bureau of Statistics and Debt
Management Office, Nigeria's total public debt
stock, which includes external and domestic,
state, and federal government debts, stood at
N87.379 trillion in Q2 2023 (as of June 30)
from N49.853 trillion on Q1 2023 (as of
March), indicating a growth rate of 75.27% on
a quarter-on-quarter basis. In the same vein,
Nigeria's Gross Domestic Product grew by just
2.51% and stood at N52.1 trillion in Q2 2023,
according to the National Bureau of Statistics.
This simply indicates that Nigeria's debt
burden is substantial compared to the size of
the economy. This may raise concerns about
our country's ability to service its debts without
experiencing financial stress.
According to former minister of finance,
budget, and national planning, Zainab Ahmed,
"Nigeria spent 60% of revenue on debt
servicing in 2023". Therefore, the Nigerian
government needs to diversify its revenue
base from over reliance on oil and borrowings
to bring in more funds to grow the economy,
tackle its current inflation problem, and secure
its economic future. Excessive focus on oil has
led to a situation where Nigeria is heavily
indebted and dependent on imports for goods
and services, including food and refined
petroleum products. This dependency exposes
the economy to external supply chain
disruptions and foreign exchange risks.
Addressing this over reliance on oil revenue
requires concerted efforts to diversify the
economy away from oil and think about a
reliable and sustainable source of revenue to
enable Nigeria to build a more resilient and
sustainable economy less vulnerable to the
volatility of global oil markets.
This document explores the significance of
re-imagining taxation in Nigeria to foster
economic growth and development. Therefore,
it could be considered an immediate option for
our present economic problem.
Re-imagining taxation as a tool for economic
growth in Nigeria does not mean increasing
tax rates or introducing new taxes that will
translate into unnecessary and undue burdens
on individuals and businesses. It is the idea of
reconceptualizing the role of taxation in
fostering and promoting economic
development. It suggests a broader
perspective on the potential of designing and
implementing tax policies and structures to
generate revenue and positively influence
economic behavior and outcomes.
Re-imagining taxation as a tool for economic
growth in Nigeria is a crucial endeavor that
requires a holistic and strategic approach.
Some key taxation strategies that the Nigeria
Government can harness to foster economic
growth include:
Introduction
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 3

4. 1. Broadening the
tax base
This is critical for sustainable economic growth
and development and remains a serious
aspect of re-imagining taxation for economic
growth. Nigeria's tax base is relatively narrow,
with a large informal economy that escapes
taxation. Bringing more businesses and
individuals into the tax net can expand
government tax revenue and provide the
resources needed for infrastructure, education,
and healthcare investments.
The informal sector is one primary sector that
the Nigerian government can harness to
broaden the tax base. However, bringing this
sector into the tax net is a significant challenge
for many developing countries, including
Nigeria. The informal sector, which
encompasses many economic activities that
are not easily captured by formal tax systems,
presents a substantial potential tax base.
However, traditional tax collection methods are
often ineffective due to its diverse and often
hidden nature. Implementing strategies to
formalize and tax the informal sector requires
a comprehensive and tailored approach
considering the unique characteristics and
challenges of informal businesses and
workers. Meanwhile, some strategies can be
employed to bring the informal sector into the
tax net in Nigeria.
For example, by simplifying tax compliance.
Many informal businesses operate in a
cash-based economy and may lack the
resources and expertise to navigate complex,
cost-effective tax systems. Simplifying tax
compliance procedures, such as introducing
flat-rate taxes or simplified tax filing processes,
can make it easier for informal businesses to
fulfill their tax obligations.
Many individuals and businesses in the
informal sector may not fully understand the
benefits of taxation or the negative
consequences of tax evasion. Therefore,
educational campaigns and outreach
programs can help raise awareness about the
importance of taxation, the services it funds,
and the role of informal businesses in
contributing to the country's development.
businesses and workers. Meanwhile, some
strategies can be employed to bring the
informal sector into the tax net in Nigeria.
“... traditional tax
collection methods are
often ineffective due to
its diverse and often
hidden nature.”
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 4

5. Leveraging technology and digital payment
systems can help to track and capture
economic activities in the informal sector.
Mobile money, digital wallets, and electronic
payment platforms can allow informal
businesses to participate in the formal financial
system, making monitoring and taxing their
transactions more accessible.
Many informal businesses operate within
associations or networks. Engaging with these
associations can provide a channel for
communication, education, and collaboration
on tax compliance initiatives. Partnering with
informal sector representatives can help tailor
tax policies and enforcement strategies to
these businesses' specific needs and realities.
Partnering with banks and other financial
institutions can help integrate informal
businesses into the formal financial system,
making their economic activities more
transparent and accessible to tax.
Designing tax policies tailored explicitly to
informal businesses' characteristics and
capacity can encourage compliance.
Rather than expecting immediate full
compliance, a phased approach to
formalization can be more effective.
Incentivizing informal businesses to register
and gradually comply with tax requirements,
such as access to credit, business support
services, and government procurement
opportunities, can encourage voluntary
compliance over time.
Improving enforcement and monitoring
capabilities and leveraging data analytics can
help identify and monitor informal
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 5

6. sector activities more effectively. This may
involve increasing the capacity of tax
authorities to conduct targeted audits and
investigations into informal businesses that are
suspected of underreporting or evading taxes.
It is essential to recognize that the informal
sector plays a significant role in many
economies, providing livelihoods for a large
portion of the population.
Therefore, efforts to bring the informal sector
into the tax net should be balanced with
measures to support and formalize these
businesses rather than simply focusing on
punitive measures. Bringing this sector into the
tax net in Nigeria requires a multifaceted
approach that addresses the unique
characteristics and challenges of informal
businesses.
2. Promoting
transparency and
accountability
Transparency and accountability are powerful
tools for promoting taxation by fostering trust,
transparency, and fairness within the tax
system. When Nigerian governments, tax
authorities, and public
institutions are accountable for their actions
and decisions related to taxation, it can lead to
increased compliance and improved revenue
collection. When taxpayers have confidence
that their government and tax authorities are
accountable for their actions, they are more
likely to believe that their tax contributions will
be used for the benefit of society. This trust
can lead to a greater willingness to pay taxes
and comply with regulations.
The Nigerian informal sector made up about 65% of the country's 2017 GDP. - Source: The IMF
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 6

7. Accountability encourages the disclosure of
information related to tax policies, collection
processes, and the use of tax revenue. This
transparency helps taxpayers understand how
their contributions are being utilized, which can
reduce suspicion and increase compliance.
Holding tax authorities accountable for their
decisions and actions can help ensure that the
tax burden is distributed fairly and equitably.
This can include measures to prevent
preferential treatment of certain taxpayers and
address tax avoidance and evasion issues.
Accountability mechanisms, such as
independent audits, oversight bodies, and
reporting requirements, can help ensure tax
authorities operate with integrity and efficiency.
This can reduce opportunities for corruption
and mismanagement of tax funds, which in
turn can enhance taxpayer confidence and
compliance. When tax authorities are held
accountable for enforcing tax laws effectively
and consistently, it can deter tax evasion and
non-compliance.
Taxpayers are more likely to meet their
obligations when they perceive that others are
doing the same and that non-compliance has
consequences.
Accountability in tax matters also extends to
international cooperation, particularly in
exchanging tax information between countries
and international tax authorities. This helps
prevent tax evasion through global tax
planning and ensures taxpayers are
accountable for their cross-border income.
Nigeria has one of the lowest tax to GDP ratios not just in the world but also in Africa
Source:
- OECD
- Financial Times (FT)
“When taxpayers have
confidence that their
government and tax
authorities are
accountable for their
actions, they are more
likely to believe that
their tax contributions
will be used for the
benefit of society.”
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 7

8. 3. Deployment of
technologies
The global economy has witnessed a
significant transformation driven by
technological advancements in recent years.
Nigeria, as a prominent player in the African
economy, should appreciate the potential of
technology in redefining various sectors,
including taxation. Leveraging technology
presents a transformative opportunity for
re-imagining taxation in Nigeria. By embracing
digital innovations, the country can overcome
existing challenges, broaden its tax base, and
foster economic growth.
Nigeria faces several challenges in its taxation
system, including low tax compliance,
cumbersome tax processes, and significant
revenue leakages. The informal sector, which
constitutes a substantial part of the economy,
often operates outside the tax net, leading to a
narrow tax base. Additionally, manual tax
administration processes contribute to
inefficiencies and corruption and hinder the
government's ability to collect taxes effectively.
Technology offers innovative solutions to
address these shortcomings of traditional tax
systems, and by leveraging technology,
Nigeria can reimagine taxation.
For example, implementing digital platforms for
tax registration, filing, and payment can
streamline processes and improve
transparency. Online tax portals and mobile
applications can make it easier for taxpayers
to fulfill their obligations while enabling the
government to track and monitor compliance
more effectively.
Advanced data analytics tools can help tax
authorities identify non-compliant taxpayers
and enforce tax laws more efficiently. By
analyzing vast amounts of data, authorities
Also, implementing blockchain technology in
tax administration can enhance
transparency and accountability by creating
an immutable record of transactions. This
can help combat corruption and build trust
between taxpayers and the government.
Introducing e-invoicing systems can
automate the generation and exchange of
invoices, reducing the opportunity for tax
fraud. Digital audit tools can also enhance
the efficiency of tax audits and ensure
greater accuracy in assessing tax liabilities.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 8

9. 4. Simplifying the
tax system and
process
Simplifying Nigeria's tax system and process
can be a powerful tool for promoting taxation
and driving economic development. Nigeria
faces tax compliance, revenue generation, and
overall economic growth challenges. By
streamlining the tax system and making the
process more straightforward, the government
can encourage more individuals and
businesses to comply with tax regulations and
contribute to the country's financial stability.
One way to simplify the tax system is by
reducing the complexity of tax laws and
regulations. Nigeria's tax law is often
perceived as intricate and challenging,
especially for small businesses and
individuals. Simplifying the tax laws by
removing unnecessary complexities,
ambiguities, and inconsistencies can make it
easier for taxpayers to understand their
obligations and comply with the law. This can
help reduce the cost of compliance and
improve voluntary tax compliance rates.
Another critical aspect of simplifying the tax
system is modernizing and digitizing tax
processes. Implementing user-friendly online
platforms for tax registration, filing, and
payment can significantly reduce the
administrative burden on taxpayers. By
leveraging technology, the Nigerian
government can automate routine tasks,
provide clear guidance, and offer interactive
tools to make the tax process more efficient
and accessible. This can also enhance
transparency and reduce opportunities for
corruption.
In addition, simplifying the tax system can
involve rationalizing the tax structure.
Nigeria currently has a complex array of
taxes, levies, and duties imposed at the
federal, state, and local government levels
and by different ministries, departments, and
agencies. Consolidating and harmonizing
these taxes where possible and eliminating
overlapping or contradictory provisions can
make the tax system more coherent and
predictable for taxpayers. This can also
reduce administrative costs and compliance
burdens for taxpayers and tax authorities.
Furthermore, providing education and
outreach programs to raise awareness
about tax responsibilities and rights can
complement efforts to simplify the tax
system. Many individuals and businesses in
Nigeria may not fully understand the tax
laws and their obligations. By offering clear
and accessible information, the government
can empower taxpayers to fulfill their
responsibilities and make informed
decisions.
By simplifying the tax system and process,
Nigeria can create a more conducive
environment for tax compliance and revenue
generation. Increased tax revenues can then
be channeled into critical public services and
infrastructure development, ultimately
contributing to economic growth and poverty
reduction. Nonetheless, it's essential to
ensure that any simplification efforts are
accompanied by robust enforcement
mechanisms to deter tax evasion and
maintain a level playing field for all
taxpayers.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 9

10. 5. Improving tax
administration
and enforcement
Improving tax administration and enforcement
in Nigeria is crucial for promoting taxation and
driving sustainable economic development.
Effective tax administration ensures that the
government can efficiently collect revenues
essential for funding public services,
infrastructure, and social welfare programs. By
enhancing tax administration and enforcement,
Nigeria can expand its tax base, increase
compliance levels, and foster economic growth
and stability.
One key aspect of improving tax administration
is modernizing and strengthening the capacity
of tax authorities and officials. This can be
achieved through investments in technology,
training, and infrastructure. Implementing
modern tax information systems can enhance
tax collection, processing, and enforcement
efficiency and accuracy. Moreover, providing
comprehensive training programs for tax
officials can improve their tax assessment,
auditing, and compliance management skills.
Strengthening the capacity of tax authorities
can also enable them to better identify tax
evasion and enforce compliance with existing
tax laws.
Another critical component of improving tax
administration is streamlining tax procedures
and reducing bureaucratic hurdles. Simplifying
tax registration, filing, and payment processes
can make it easier for individuals and
businesses to fulfill their tax obligations. This
can be achieved by implementing user-friendly
online platforms, clear guidance on tax
compliance, and reducing unnecessary
paperwork. By simplifying tax procedures,
the government can encourage voluntary tax
compliance and minimize opportunities for
corruption and rent-seeking behavior.
Additionally, establishing a fair and
transparent appeals process can provide
taxpayers with recourse in disputes, thereby
enhancing trust in the tax system.
In addition to improving tax administration
and enforcement, the Nigerian government
can benefit from enhancing collaboration
and information sharing among government
agencies. Coordination between tax
authorities, customs, and relevant agencies
can help identify discrepancies and prevent
tax evasion through cross-border
transactions and illicit financial flows. This
can be particularly important in combating
tax evasion in international trade, natural
resources, and high net-worth individuals.
By modernizing tax systems, simplifying
procedures, strengthening enforcement,
fostering inter-agency collaboration, and
raising public awareness, the Nigerian
government can expand its tax base,
increase revenue collection, and create a
more equitable and efficient tax system.
These efforts can contribute to building a
more prosperous and inclusive society for all
Nigerians.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 10

11. 6. Aligning
taxation with
development
goals is crucial
Tax policies should promote investment, job
creation, and innovation. This may involve
offering targeted tax incentives to specific
industries or activities vital for economic
growth, such as manufacturing, technology,
and agriculture. Nigeria can expand its tax
base, enhance revenue collection, and utilize
tax revenues to address key development
challenges by ensuring that the tax system is
aligned with development objectives.
Aligning taxation with development goals
entails prioritizing investments in critical
sectors contributing to long-term economic
growth and human development. For instance,
the government can utilize tax incentives and
exemptions to encourage private sector
investment in areas such as education,
healthcare,power and energy, and
infrastructure development. By aligning tax
policies with development priorities, Nigeria
can stimulate investment in sectors that have
the potential to improve the well-being of its
citizens significantly.
In addition, leveraging tax revenues to finance
sustainable development initiatives is essential
for achieving development goals. The
government can earmark tax revenues for
specific programs and projects to address
social challenges, such as poverty reduction,
healthcare access, education, and
environmental sustainability. By transparently
allocating tax revenues to these initiatives, the
government can demonstrate the tangible
impact of taxation on improving the lives of its
citizens, thereby fostering more significant
support for taxation.
Aligning taxation with development goals
involves fostering a conducive business
environment to promote economic growth
and job creation. A competitive and
predictable tax regime can attract domestic
and foreign investment, spurring
entrepreneurship and economic
diversification. By reducing tax-related
barriers and compliance costs for
businesses, the government can encourage
formalization and expansion of the tax base,
ultimately contributing to sustainable
economic development.
Another important aspect of aligning taxation
with development goals involves promoting
equity and fairness in the tax system.
Nigeria, like many countries, grapples with
high levels of income inequality. By
designing tax policies that are progressive
and equitable, the government can ensure
that individuals and businesses contribute to
public finances in a manner that reflects
their ability to pay. This can be achieved
through progressive income taxation, wealth
taxes, and targeted tax incentives to support
vulnerable populations and encourage
investment in critical sectors.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 11

12. 7. Engaging
stakeholders
This can be a crucial tool for promoting tax
compliance in Nigeria. Stakeholder
engagement involves involving a wide range of
individuals, organizations, and groups in the
tax system, including taxpayers, tax
authorities, civil society, and the private sector.
By fostering dialogue, collaboration, and
partnerships among these stakeholders, the
Nigerian government can improve tax
compliance, enhance transparency, and build
trust in the tax system.
One key aspect of engaging stakeholders in
promoting tax compliance is to create
platforms for open and constructive dialogue.
This can involve organizing public
consultations, stakeholder forums, and
advisory committees to solicit input and
feedback on tax policies, administration, and
enforcement. By actively seeking the
perspectives of taxpayers and other
stakeholders, the government can gain
valuable insights into the challenges and
opportunities related to tax compliance and
develop more effective and inclusive tax
policies.
Furthermore, engaging stakeholders can
provide taxpayers with channels to voice
their concerns and seek clarification on tax
matters. Establishing accessible and
responsive communication channels, such
as hotlines, online portals, and taxpayer
service centers, can enable individuals and
businesses to seek guidance on their tax
obligations, resolve disputes, and provide
feedback on their experiences with the tax
system. This can help build trust and
confidence in the fairness and
responsiveness of the tax administration.
In addition, engaging stakeholders can also
entail collaborating with civil society
organizations, professional associations,
and the private sector to promote tax
compliance. These stakeholders can play a
vital role in disseminating information about
tax laws, rights, and responsibilities to their
constituents and in advocating for
transparent and accountable tax
administration.
By partnering with these organizations, the
government can leverage their expertise,
outreach networks, and credibility to
promote a culture of compliance and
accountability.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 12

13. Moreover, engaging stakeholders can involve
providing taxpayer education and awareness
programs to inform the public about the
benefits of taxation, the impact of tax
revenues on public services, and the
importance of compliance. These programs
can be delivered through various channels,
including media campaigns, community
outreach events, and educational materials.
By enhancing taxpayers' understanding of the
tax system, the government can empower
them to fulfill their obligations and contribute
to the country's development.
Additionally, engaging stakeholders can entail
collaborating with the private sector to
improve tax compliance. This can involve
working with business associations, industry
groups, and large taxpayers to foster a
culture of voluntary compliance, discourage
tax evasion, and promote ethical business
practices. By engaging with the private
sector, the government can encourage
responsible tax behavior, address
industry-specific compliance challenges, and
promote a level playing field for all
businesses.
Engaging stakeholders is a powerful tool for
promoting tax compliance in Nigeria. By
creating opportunities for dialogue, providing
accessible communication channels,
collaborating with civil society and the private
sector, and delivering taxpayer education
programs, the government can build trust,
enhance transparency, and foster a culture of
compliance in the tax system. These efforts
can expand the tax base, increase revenue
collection, and ultimately support Nigeria's
social and economic development goals.
By engaging with
the private sector,
the government
can encourage
responsible tax
behavior, address
industry-specific
compliance
challenges, and
promote a level
playing field for all
businesses.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 13

14. 8. Directing tax
revenue towards
critical
infrastructure
projects
By demonstrating a clear link between tax
payments and tangible improvements in
infrastructure, the government can encourage
greater compliance and foster a sense of civic
duty among taxpayers. Investing tax revenue
in critical infrastructure projects, such as
roads, bridges, schools, and healthcare
facilities, offers several potential benefits for
promoting tax compliance.
When taxpayers see that their contributions
are directly improving their communities
through constructing and maintaining essential
infrastructure, they are more likely to feel
that their tax payments are worthwhile. This
can help to build trust in the government and
increase voluntary compliance.
The Improved infrastructure can stimulate
economic growth by reducing transportation
costs, improving market access, and
attracting investment. As a result, taxpayers
may be more willing to fulfill their tax
obligations when they see the positive
impact on their economic opportunities.
Better infrastructure can enhance the quality
of life for citizens, leading to improved public
health, education, and overall well-being.
This can create a sense of shared
responsibility among taxpayers as they
witness the direct benefits of their
contributions to the tax system.
By effectively implementing these strategies
and addressing other underlying challenges,
the Nigerian government can work towards
building a more robust and sustainable tax
base for the country's development.
Re-Imagining Taxation as a Tool For Economic Growth In Nigeria 14

15. In conclusion, Nigeria stands at a
pivotal moment to harness the
immense opportunity for economic
rejuvenation through re-imagining
taxation. By expanding the tax base,
embracing transparency, and
leveraging technology, the nation can
not only overcome challenges but also
pave the way for inclusive growth.
Simplifying processes, engaging
stakeholders, and aligning tax policies
with development goals present
exciting avenues for positive change.
Directing tax revenue towards critical
infrastructure projects further solidifies
the opportunity to build a thriving,
resilient economy, ensuring a brighter
and more prosperous future for all.
Richard Ojo

16. Richard Ojo
FCA, ACTI, CFE, CPFA, FCFIP, CFIP, ACA (ICAEW)
Richard Ojo is the founder and CEO of Taxmingo, the innovative company
pioneering online tax computation services in Nigeria. He is also the
founder and managing partner of Deem Forensic Services. A professional in
forensic accounting and fraud examination practice and taxation spaces in
Nigeria but also in the technology space as a result of the launch of
Taxmingo, which is a revolutionary company that solves tax compliance
problems for small and medium enterprises (SMEs) in Nigeria to make tax
compliance easy, efficient and affordable.
Richard is a renowned practicing forensic accountant in Nigeria whose
ideas, skills, and professionalism have benefited multiple state
governments in Nigeria to enhance their Internally Generated Revenue
(IGR) by partnering with them to unveil tax fraud by financial institutions
and recover evaded taxes, which eventually. He recently founded
Taxmingo, Nigeria’s first online tax filing solution provider, and an
innovation that is helping to solve the long-time problem of tax compliance
for both government and small businesses in Nigeria.
He has been featured in multiple business and financial publications and
news media, where he shared his pool of knowledge in the taxation,
forensics, and entrepreneurship space. His work, Taxmingo, has also been
featured in multiple media publications and has received numerous
accolades for making it easy for small businesses to compute and file taxes
using cloud technology.
o.richard@taxmingo.com
www.richardojo.com