Oyedele explained that the exemption forms part of a broader overhaul of Nigeria’s tax framework, much of which he said is rooted in colonial-era legislation that no longer aligns with current economic realities.
The Federal Government has announced plans to exempt millions of low-income Nigerian workers from paying personal income tax, in a sweeping reform aimed at easing the cost-of-living crisis and restructuring what officials describe as an unjust tax system.
Under the proposed reforms, workers earning N100,000 or less per month across both the public and private sectors will no longer be required to pay personal income tax from January next year, according to The Tribune.
The policy, according to government officials, will affect about one-third of Nigeria’s workforce nationwide.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this while speaking with journalists in Lagos at the weekend, describing the move as a deliberate effort to end what he called the long-standing practice of “taxing poverty” in Nigeria.
“These are Nigerians who are barely surviving, yet we still tax them,” Oyedele said. “Instead of taxing people who cannot meet their basic needs, we should be supporting them.”
Oyedele explained that the exemption forms part of a broader overhaul of Nigeria’s tax framework, much of which he said is rooted in colonial-era legislation that no longer aligns with current economic realities.
He noted that many countries that originally adopted similar tax structures have since reformed or abandoned them after they became obstacles to growth, productivity and investment.
Beyond low-income earners, the reforms will also reduce the tax burden on middle-income workers. Individuals earning between N100,000 and about N2 million monthly are expected to pay less tax under the new regime, effectively increasing their disposable income without any salary adjustment.
Responding to claims that Nigeria’s middle class has disappeared, Oyedele said the segment may have shrunk but remains essential to economic stability.
“If you destroy the middle class, you weaken consumption, savings and long-term growth,” he said.
Under the proposed structure, high-income earners will bear a slightly higher tax burden. Oyedele said only about two per cent of Nigeria’s working population falls into this category.
A top personal income tax rate of 25 per cent will apply to individuals earning N120 million or more annually, a measure he described as modest and targeted.
“This is not about punishing success,” Oyedele said. “It’s about restoring balance and fairness in the system.”
The reforms also address structural challenges in business taxation. Oyedele noted that Nigeria is among the top 10 countries globally with the highest tax burden on businesses, despite its need for investment to drive job creation and reduce poverty.
“We are not the United States or China, where capital is abundant,” he said. “Nigeria is searching for investment, yet we operate one of the most complex and punitive tax systems in the world.”
As part of the changes, the corporate income tax rate has been reduced from 30 per cent to 25 per cent. Small businesses with annual turnover below N100 million will now pay zero per cent corporate income tax, a move aimed at encouraging informal businesses to formalise and grow.
Oyedele also criticised multiple taxation and the activities of numerous tax-collecting agencies, including non-state actors, which he said have made compliance expensive and prone to abuse.
According to him, several existing tax laws will be repealed and replaced with a simplified framework to eliminate duplication and improve transparency.
He warned that misinformation has distorted public debate around the reforms, citing false claims about inheritance taxes and exaggerated fears of widespread tax increases.
“People are entitled to informed opinions, not ignorance,” Oyedele said.
Linking the reforms to Nigeria’s widening inequality, Oyedele said taxing low-income earners in an unequal society only fuels frustration and social tension.
“These reforms are about fairness, inclusion and growth,” he said. “If we get the incentives right, businesses will grow, jobs will be created, and Nigeria will work better for everyone.”