The furore about whether the tax laws should be implemented or not has passed. The nationwide discussions about the discrepancy between the gazetted version and the version passed by the National Assembly have also faded. January 1 has come and gone, and many changes, especially around digital transactions, are already beginning to manifest, as provided for under the new tax law. The consolidated tax laws under the tax reform regime are now in force and, as a citizen, I hope they are backed by strong accountability mechanisms and oversight to ensure that collected taxes are used for the right purposes.
However, there is a major policy gap I observed at the very last minute of the law’s implementation which, if left unaddressed, may not only undermine the effectiveness of the law but also cause more harm to its objectives. If I were to estimate, I would say that less than 5% of Nigerians understand what the new tax law contains, how it works, and what it does not do. This knowledge gap has created a fertile ground for misinformation, disinformation, and fake news.
In the past few days, I have personally encountered many people who told me they had withdrawn all the money saved in their bank accounts and converted it to cash. They said they no longer trust cashless transactions. Some were told that every single transaction, irrespective of the amount, would attract a flat ₦50 charge.
Others were also told that just keeping money in their accounts would lead to monthly deductions, or that a 5% of their savings would be deducted every month for the tax. None of these claims could be traced to any provision of the law, yet they are widely being shared with absolute confidence.
Another unfortunate experience, was my encounter with a young and vibrant POS agent from whom I regularly withdraw cash. He told me he had shut down his business. According to what he was told, every ₦500,000 transaction would attract ₦15,000 in tax, every ₦5 million would attract ₦250,000, and any transaction above ₦1,000 would automatically be charged ₦50.
He was also told these deductions would be accumulated and collected at the end of the month, and that’s what frightened him most. He used to make transactions of an average of ₦50 million per month. With this information, he now chose to abandon his livelihood. Whether these claims are true or false is not the most important when one considers the damage such misinformation is already causing.
There is also a growing narrative, particularly on social media, that every transaction must now be clearly explained in the narration section. People are being told they must specify whether the money is for savings, shopping, gifts, rewards, profit, or salary. A counter-narrative exists saying this is false. Sadly, the average Nigerian does not know which version to believe. In an environment where official clarity is weak, rumours travel faster than facts.
If I were to document all the misinformation circulating about the new tax law, it would take more than a newspaper opinion. New versions emerge almost every hour. The most alarming outcome of this misinformation is how people are altering their economic behaviour. Businesses are being abandoned. Trust in digital finance is being eroded. People are deserting the cashless system out of fear, believing their money is no longer safe in the banking system.
The only effort I am aware of to address this information gap is the reported engagement of social media influencers to enlighten the public. If this effort has begun, it is not enough. If it has not, then it is urgently needed. But beyond influencers, one must ask: what happened to local radio stations? Radio remains the primary source of information for millions of Nigerians, especially in rural areas. The law should be broken down and discussed in local languages on local radio.
There are also a proliferation of online television platforms operating across social media spaces. The tax reform committee should strategically collaborate with them to explain the law in simple and creative ways. Influencers alone cannot carry this burden. Public communication must be broader, more structured, and more deliberate.
The Federal Ministry of Information also has a central role to play here. There is an urgent need for a simplified version of the tax law and other versions translated into local languages, and disseminated in collaboration with state ministries of information. Students, heads of households, community leaders, traders, and small business owners must all be deliberately engaged. Town hall meetings, especially in peri-urban communities, should be organized. They are necessary to counter the scale of misinformation already circulating.
When people are largely unaware of what a law entails, dysfunction is inevitable. The law may exist, but its implementation will be undermined by fear, resistance, and unintended consequences. By the look of things, those who understand the new tax law are currently the fewest in Nigeria, even among the highly educated. If this gap remains wide open, the law may struggle to achieve its intended outcomes.
Now that it’s here, I hope, and I genuinely pray, that if effectively implemented and properly communicated, the new tax laws will become one of the long-awaited channels for fixing many of Nigeria’s challenges. But without deliberate public education, I doubt if the policy can yield the desired result.
Isah Kamisu Madachi is a public policy enthusiast and development practitioner. He writes from Abuja and can be reached via: [email protected]