NLC urges accountability amid tax overhaul

The Lagos State chapter of the Nigeria Labour Congress has welcomed Nigeria’s newly carried out tax reforms however emphasised that employees will solely profit if authorities revenues are correctly managed to ship public providers.

“The brand new tax regime is an efficient step in the appropriate route,” Chairperson of NLC Lagos Funmi Sessi advised The PidomNigeria. “Nevertheless, employees will solely totally embrace taxation if revenues are used successfully for public providers resembling roads, electrical energy, safety, healthcare, and job creation, reasonably than being misplaced to corruption.”

The reforms, efficient 1 January 2026, overhaul the Pay-As-You-Earn system and develop exemptions to scale back the tax burden on staff, significantly low-income earners. Early stories counsel that whereas many employees noticed solely modest will increase of their January pay cheques, the structural enhancements goal to spice up disposable revenue over time.

The changes comply with probably the most vital overhauls of Nigeria’s tax system in a long time. On 26 June 2025, President Bola Tinubu signed 4 payments into legislation: the Nigerian Tax Act 2025, the Nigerian Tax Administration Act 2025, the Nigeria Income Service (Institution) Act, and the Joint Income Board (Institution) Act. The reforms, efficient 1 January 2026, goal to simplify tax administration, cut back a number of taxation, promote equity, and enhance compliance throughout sectors.

The reform locations Africa’s largest economic system alongside different Sub-Saharan economies pursuing gradual tax recalibration to help family consumption amid persistent inflation pressures.

“I don’t know the notion of different folks or their very own emotions about it, however general, the brand new tax regime might be beneficial to employees,” Sessi mentioned.

Sessi famous that the reforms prolong past PAYE, with extra reliefs that might ease monetary strain on households. Stamp obligation on cash transfers under N10,000 and transfers inside the similar financial institution has been eliminated, whereas value-added tax on fundamental meals gadgets and sure family merchandise has additionally been eradicated.

“Withholding taxes and improvement levies for small firms had been decreased or eliminated, reducing operational prices and doubtlessly decreasing the price of items and providers,” she mentioned.

Underneath the revised framework, contributions to pensions, the Nationwide Well being Insurance coverage Fund, and housing funds are not taxable. Mortgage repayments and donations to non-governmental organisations are additionally exempt, which means solely remaining revenue is topic to tax. Low-income earners profit essentially the most: people incomes 800,000 naira or much less yearly now pay no tax, whereas greater incomes are taxed at graduated charges from 15 per cent to 25 per cent.

She emphasised that low-income earners stood to profit most from the adjustments. “Anybody incomes N800,000 or much less yearly would now pay no tax, a big enchancment from the previous system the place even employees incomes lower than N300,000 had been taxed. For greater earners, tax charges had been graduated: incomes between N800,000 and N3m pay 15 per cent, N3m to N12m pay 18 per cent, N12m to N25m pay 21 per cent, and incomes above N15m pay 25 per cent.”

Whereas welcoming the reforms, Sessi burdened the significance of presidency accountability. She mentioned employees would solely totally embrace taxation if revenues had been used successfully to supply public providers resembling roads, electrical energy, safety, healthcare, and job creation, reasonably than being misplaced to corruption.

She additionally urged merchants and enterprise house owners to adjust to tax obligations, noting that international locations the place residents willingly pay taxes have a tendency to indicate seen improvement outcomes.