The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said that under the new tax laws, Nigerian households earning ₦250,000 or less per month are classified as poor and exempt from paying taxes.
The former tax leader at PriceWaterhouseCoopers (PwC) stated this on Channels Television’s Politics Today on Thursday, a few hours after President Bola Tinubu assented to four new tax bills.
Oyedele, whom the President appointed in July 2023, described his two-year stint as chair of the tax reform committee as both eventful and challenging.
He said that the objectives of the new laws, which would take effect from January 2026, were not intended to increase taxes but to stimulate economic activity in the country and track tax evaders.
Oyedele stated that the new laws would also protect businesses and ensure that the government doesn’t tax poverty, adding that the new laws are efficiency-driven, growth-focused, and people-centric.
“This tax law will not give you cash in your pocket, but at least it won’t take your cash away if you are poor.”
He said nobody earning below ₦250,000 would have to pay taxes because they don’t even have enough.
“We have eliminated the tax component for people at the bottom, we have reduced for people at the middle, and we have increased slightly for people at the top.
“That middle, we estimated it at about ₦1.8 to ₦2m a month. If you are earning that amount and below, your tax will not be zero but it will reduce from what you are paying today,” he stated, noting that those who earn this amount are about 5% of the total Nigerian population.
The tax boss said to arrive at a decision, his committee debated the poverty line of an average Nigerian.
Oyedele said, “We debated this question; we said: ‘Who is a poor person in Nigeria?
“First, we started with data like the World Bank and the UN will tell you two dollars, fifteen cents a day per person means you are at the poverty line but there are people who do not earn two dollars a day but they are not poor because they produce the food that they eat and they do not pay for transportation. I lived and grew up in the village.
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“So, we had to factor that in. We drew our own (poverty) line for Nigeria on the basis of an average of five people per family: two people working if they are lucky, taking care of the five.
“When we did the maths, it gave us an amount, and that was what we used in determining the income below which nobody should pay taxes.
“We came up with a ₦120,000 or ₦130,000 per two people working in a household of five. If the earnings are about ₦250,000, they can take care of themselves. Of course, they are not going to have luxury, but at least they can take care of themselves. They are poor, and they shouldn’t pay taxes.”
Oyedele stated that Nigeria currently collects only about 30% of what the country should be receiving in taxes, noting that the objective of the new tax laws is to close the 70% gap.
