Tinubu’s Tax Reform and Nigeria’s Broken Social Contract

This article by Fikayo Akeredolu discusses the Nigerian Government’s new tax laws, the discrepancies therein and the need for transparency and accountability; the relationship of taxation and the social contract between the State and the citizens, highlighting how Government has failed to perform its own side of the agreement, shifting its burden onto the people, thereby turning this new tax initiative into nothing more than an extraction from the people with more paperwork, rather than reform. She makes suggestions on what should happen, going forward, to improve the current situation 

Let me start by saying that I do not object to paying taxes, or to the idea that Nigeria’s tax system requires reform.

What I object to is being taxed by a government that delivers almost no public value in return for the revenue it collects from citizens. Put more formally, I object to being taxed by a State that fails to uphold its side of the social contract.

Social Contract 

The social contract is the implicit agreement between a State (Government) and its citizens regarding rights, duties, and expectations. Citizens accept the authority of the State (Government), including its laws and taxation powers, because the Government is expected to provide protection, basic services, fairness, and some improvement in collective welfare over time. Tax compliance and rule-following are exchanged for security, opportunity, and public provision.

In Nigeria, this contract has been eroded to a devastating degree. Where I live, we supply our own water through private boreholes, generate our own electricity using generators and inverters, and pay for private security to compensate for an underfunded Police Force. When a massive pothole developed on our road, damaging vehicles and disrupting daily life, residents came together to fix it themselves, relying on personal funds and informal coordination, rather than any arm of the State. These experiences are not exceptional. They reflect the ordinary conditions under which many Nigerians live, where the State has abandoned its end of the social contract, and is largely absent from the most basic functions it is supposed to fund.

New Tax Laws

It is against this backdrop of a broken social contract, that the Tinubu administration is pursuing tax reform. The proposed reforms are sweeping. They consolidate multiple tax laws into a single framework, expand digital monitoring and enforcement, tighten compliance requirements, and impose harsher penalties for evasion. The proposals introduce presumptive taxation that pulls millions of informal earners into the tax net, including freelancers, small traders, and digital workers. They implement global minimum tax rules for multinationals, restrict corporate deductibility on certain expenses, and replace earmarked levies with broader development taxes. There are new surcharges on fossil fuels supposedly meant to fund clean energy, and higher compliance thresholds that catch more businesses in enforcement.

On paper, this looks like the Nigerian Government is finally building fiscal capacity. In practice, it assumes a level of bureaucratic competence, institutional credibility, and even-handed enforcement that everyday experience in Nigeria struggles to support. The Nigerian State, especially this current administration, lacks the administrative ability, required credibility, and demonstrated willingness to apply these reforms fairly, correctly, and evenly.

So, the question becomes: what motivates a State to pursue higher levels of tax compliance when it makes little effort to rebuild trust, credibility, or reciprocal provision? Why would a government strengthen its ability to collect revenue, in the face of its inability and seeming unwillingness to uphold its end of the social contract?

Electricity supply remains unreliable across much of the country. Fuel prices have risen sharply since subsidy removal, feeding directly into transport and food costs. Inflation continues to erode real incomes. Public healthcare and education remain unpredictable in quality and access. Security outcomes vary sharply, by region and income. Government efforts to alleviate this suffering are limited at best. Daily life already requires citizens to absorb costs that the state nominally exists to manage. Within this context, expanded taxation is detached from lived governance outcomes and increasingly difficult to justify within any reciprocal civic arrangement.

Resulting Tension 

The widening of the tax net, makes this tension visible. Presumptive taxation and expanded enforcement pull millions of informal earners into the fiscal system. These are people who already face unstable incomes and limited protection. Broadening the tax base has theoretical appeal, in a country with high informality. But, in practice, it targets people who absorb economic shocks directly and immediately. Inflation, currency pressure, fuel volatility, and insecurity, fall hardest on those least equipped to manage them. Adding tax obligations on top of this exposure deepens vulnerability, rather than easing it.

This could be defensible, if the government offered credible forms of protection in return. Access to affordable credit, insurance, legal recognition, predictable regulation, and effective dispute resolution could turn compliance into a benefit. Instead, what’s emerging for many is fiscal inclusion paired with social exposure. They will pay more tax, with no increase in quality of life.

Think about what that means in practice. A freelance graphic designer in Lagos could face presumptive tax obligations based on estimated income, rather than actual earnings. If work dries up for three months, the tax bill doesn’t adjust. If clients delay payment, there’s no State-backed mechanism to enforce contracts or provide bridge financing. If inflation spikes and transport costs double, there’s no safety net. The tax collector shows up with digital enforcement tools, and penalties for non-compliance. The State that’s supposed to provide security, opportunity, and basic services remains absent. At this point, the social contract is gone, and the government is now no more than an extractor of its own people’s livelihoods.

On the corporate side, the reform introduces sophisticated global tax concepts that require consistent enforcement, administrative coherence, and reliable institutions. Nigeria struggles across each of these dimensions. For large firms, compliance costs and uncertainty will rise. For domestic firms operating on thin margins and facing expensive financing, tighter thresholds and deductibility rules generate pressure that gets passed through to prices, wages, and employment. Ultimately, households bear these costs too. Redistribution within this framework remains opaque. Development levies replace earmarked levies with limited transparency about where the money actually goes. Fossil fuel surcharges are justified as supporting clean energy even as households facing energy poverty receive little immediate relief. There’s no clear path from compliance to benefit, no visible improvement that would justify the expanded burden.

A functional social contract doesn’t require perfection. It requires effort, transparency, and visible improvement over time. Citizens can accept taxation, if the State demonstrates that it’s trying to hold up its end of the bargain. That might look like functional primary healthcare clinics, in every local government area. It might look like roads that don’t destroy vehicles, and force communities to fund repairs themselves. It might look like a Police Force that doesn’t require bribes, for basic services. It might look like transparent budgeting, where citizens can see how tax revenue is allocated and spent. It might even look like a concerted effort, to improve Nigeria’s score on the Corruption Perceptions Index.

None of this is happening. The Tinubu administration is not even pretending to prioritise these basics, alongside tax reform. There’s no parallel agenda for service delivery, no accountability mechanism for public spending, and no effort to rebuild trust, before demanding compliance. A State that expands its power to extract revenue while failing to restore trust, fairness, and basic provisions is unilaterally renegotiating the terms of citizenship. It’s demanding deeper compliance, while offering thinner guarantees in return. In that setting, taxation ceases to function as part of a shared civic bargain, and becomes more like a compulsory transfer enforced by authority rather than by consent.

President Tinubu came into office promising “renewed hope.” What he’s delivering instead, is renewed extraction. The subsidy removal, the currency devaluation, the inflation spike, the security failures – all of this has landed hardest on ordinary Nigerians. At the same time, his government has offered almost nothing to cushion the blow. Now comes tax reform that demands even more from citizens, who are already carrying costs the government should bear.

This is a choice. President Tinubu could have sequenced reform differently. He could have prioritised visible service delivery, alongside revenue expansion. He could have built trust, before demanding compliance. He chose not to. Instead, he’s pursuing a strategy that treats Nigerians as revenue sources to be optimised, rather than citizens owed reciprocal obligations.

Nigeria does need tax reform. But, revenue without reciprocity erodes legitimacy faster than it builds State capacity. A tax system can modernise on paper, while the social contract beneath it continues to collapse. What Tinubu is building, is a State that’s closer to citizens financially, while being further away in every other sense that matters. If this administration wants compliance, it needs to earn it. Right now, it’s just demanding it. And, that’s not reform. It’s an extraction, with more paperwork.

What Should Happen Now

First, transparency. The version of the Tax Bill passed by the National Assembly and the version ultimately gazetted should be published side by side, in full. Nigerians should be able to see what was debated, what was agreed, and what now carries the force of law. In a low-trust environment, opacity doesn’t just create confusion. It confirms every suspicion citizens already have, about how power works in Nigeria.

Second, restraint. Where the law itself is under dispute, enforcement should be suspended. No deductions, penalties, or compliance actions should proceed, while questions about legislative integrity remain unresolved. Compliance secured under uncertainty, doesn’t strengthen the State. It hardens resentment, and confirms that the government cares more about extraction than legitimacy.

Third, accountability. If discrepancies between the debated and gazetted texts reflect procedural failures or deliberate manipulation, those responsible must publicly account for them. This isn’t about punishment, for its own sake. It’s about reaffirming that lawmaking is a constitutional process, not an administrative shortcut that can be gamed by whoever controls the gazette. 

Fikayo Akeredolu, Political Economist studying the political and institutional constraints that undermine reform. in oil-dependent countries like Nigeria. Completing her PhD (DPhil) at the University of Oxford, where her research draws on extensive fieldwork in Nigeria to examine how institutional fragility, elite interests, and distributional conflict shape outcomes of the energy transition. Former Bloomberg’s Country Manager for West African Countries. Currently, Senior Research Associate on the ACCLIMATE project at the University of Bristol; World Bank Africa Fellow, focusing on climate finance and policy implementation. Assistant Dean, St Anne’s College, University of Oxford