Reported by: Ime Richard Aondofa | Edited by: Henry Owen
Senator Dino Melaye has raised critical reflections on Nigeria’s newly enacted 2025 Tax Reform Act, describing taxation as more than a legal or technical exercise — but a moral covenant between government and citizens that defines fairness, accountability, and social responsibility.
Speaking as both a legislator and a recently called lawyer to the Nigerian Bar, Senator Melaye welcomed the fiscal reform as a bold step toward diversifying Nigeria’s revenue base beyond oil dependency. However, he warned that the success of the new tax law will depend on its fairness, transparency, and the government’s capacity to implement it without burdening citizens or discouraging investment.
The senator acknowledged the innovations in the Act — including the consolidation of tax statutes into a unified law, the creation of the Nigeria Revenue Service (NRS) to replace the Federal Inland Revenue Service (FIRS), and the inclusion of digital services and foreign-hosted platforms within the tax net. He described these provisions as forward-thinking measures that align Nigeria’s fiscal policy with global digital realities, ensuring that fintech, e-commerce, and cryptocurrency-based income contribute fairly to national revenue.
Senator Melaye also commended the alignment of Capital Gains Tax (CGT) with corporate income rates, a move he said closes loopholes that previously enabled profit shifting and tax avoidance by multinational corporations. Similarly, he praised the Act’s stronger compliance and enforcement mechanisms, calling them vital for restoring fiscal discipline and transparency.
However, he voiced deep concerns about the potential consequences of certain provisions, particularly on the working class and small businesses. The senator warned that while the progressive personal income tax structure exempts low-income earners and small enterprises, weak institutional capacity, poor digital infrastructure, and administrative inefficiency could undermine these gains.
He cited the new 4% Development Levy as regressive, noting that for many struggling startups, such costs could “tip margins” and stifle innovation. The senator also condemned the imposition of 7.5% VAT on aviation-related imports, calling it a “clear case of double taxation” that threatens airline survival and Nigeria’s global competitiveness.
Addressing corruption and governance lapses, Senator Melaye drew parallels between the government’s fiscal mismanagement and rising inequality. He criticized excessive state expenditure, pointing to billions allocated for luxury projects within the Presidential Villa while social sectors like education and youth empowerment remain underfunded.
“Taxation must never be blind to context,” Melaye declared. “Justice requires that we shield, not burden, the poor. What we are witnessing is not reform for public good, but a legal mechanism designed to extract citizens’ resources to sustain elite privileges.”
The senator further cautioned against the politicization of tax enforcement, warning that ambiguous laws could be “weaponized” against opposition voices, civil society, and small business owners — a development he said would undermine democratic plurality and deepen distrust in governance.
Outlining a way forward, Melaye proposed a phased and transparent implementation of the reforms, digital simplification of compliance for small enterprises, institutional strengthening, and the creation of independent anti-corruption oversight systems. He also urged prioritization of national welfare over political luxury, emphasizing that public spending must reflect citizens’ needs rather than official indulgence.
He concluded by reminding policymakers that taxation is a covenant of trust, not compulsion. “A fair and transparent tax system assures citizens that their contributions serve a meaningful purpose,” he said. “If executed with clarity and justice, the 2025 tax reform can secure Nigeria’s economic future. But if mismanaged, it will deepen hardship and erode public confidence in government.”
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