Labour Congress Threatens Revolt Over New Tax Laws, Citing Lack of Consultation and Clarity
The Nigeria Labour Congress (NLC) has issued a strong warning, threatening widespread revolt against the impending implementation of newly enacted tax reform laws scheduled to take effect from January 1, 2026. The NLC asserts it was not involved in the drafting or passage of these significant legislative changes, nor was it consulted after the bills were assented to by the National Assembly and President Bola Tinubu. This exclusion, coupled with concerns over the timing, lack of clarity, and potential negative impacts on workers and businesses, has fueled the union’s apprehension.
The NLC contends that the reforms, as currently understood, risk exacerbating the financial burden on citizens, stifling small businesses, and ultimately slowing down economic activity. The union is demanding comprehensive public enlightenment and education campaigns to ensure citizens understand the implications of these new laws before they are enforced.
Key Concerns Raised by the NLC
The NLC has outlined several critical points of contention regarding the tax reform laws:
- Lack of Stakeholder Engagement: The union highlights a complete absence of consultation with organized labour, despite workers representing the largest tax-paying demographic in Nigeria. This oversight is deemed a significant snub and an affront to citizens’ right to be informed.
- Opacity Surrounding Tax Agents: Reports of introducing tax agents for enforcement have been met with skepticism and are considered unacceptable due to a lack of transparency.
- Transparency in Tax Collection and Utilization: The NLC insists on clear and transparent processes for tax accumulation, collection, warehousing of proceeds, and their subsequent utilization. Without this, they warn of widespread public revolt.
- Exclusion from Reform Committee: The NLC reiterates its demand for representation on tax reform committees, emphasizing that crucial decisions affecting the largest tax-paying group should not be made in their absence.
- Unclear Provisions: The union is particularly concerned about the introduction of tax agents and the overall opaque nature of some provisions, which they find unacceptable.
A senior NLC official, speaking anonymously, echoed these sentiments, stating that organized labour is calling for the outright scrapping of the laws. The official accused the Federal Government of deliberately sidelining workers and other critical stakeholders in the legislative process and warned that any attempt to impose policies that worsen existing economic hardships would be met with strong resistance.
Private Sector Calls for Suspension Amidst Awareness Gaps
The concerns are not limited to labour unions. Operators of micro, small, and medium-scale enterprises (MSMEs) and the Employers Association for Private Employment Agencies of Nigeria (EAPEAN) have also called for the suspension of the laws’ implementation. Their primary concern is the insufficient awareness and inadequate stakeholder engagement surrounding the reforms.
Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), emphasized that implementing policies that a majority of MSMEs do not understand is a recipe for failure. He warned that forcing implementation could lead to mismatches and unintended consequences, potentially resulting in a colossal failure of the reform. Egbesola also questioned the capacity of the proposed Nigeria Revenue Service to effectively monitor transactions nationwide.
The ASBON president cited data indicating that micro and small businesses constitute approximately 87% of Nigeria’s estimated 40 million MSMEs. He stressed that the communication and sensitization efforts need to be tailored differently for this significant segment of the business community. Inadequate awareness, Egbesola cautioned, could trigger resistance and non-compliance. He further advocated for a pilot phase of two to three months before full enforcement to allow businesses time to adapt.
Jide Afolabi, Executive Secretary of EAPEAN, aligned with the call for suspension, highlighting the reported discrepancies between the tax bills passed by the National Assembly and the gazetted versions. He stressed the importance of reconciling these versions to prevent confusion, misinterpretation, and compliance challenges. A brief pause, he suggested, would also facilitate broader stakeholder engagement, enlightenment, and the issuance of clear implementation guidelines, ultimately leading to better compliance and acceptance of the reforms.
Manufacturers Association Declares Support for Reforms
In contrast to the concerns raised by labour and MSMEs, the Manufacturers Association of Nigeria (MAN) has declared its support for the new tax laws. The Director-General of MAN, Segun Ajayi-Kadir, expressed optimism that the reforms would usher in a more business-friendly tax regime, offering relief from what he described as “nuisance and irritant taxes” imposed by sub-national authorities.
MAN anticipates that the reforms will put an end to the harassment of businesses and allow manufacturers to operate without roadblocks related to official and unofficial taxes and levies. Ajayi-Kadir stated that his members are looking forward to the implementation from January 1, 2026, believing the law is excellently positioned to benefit businesses, particularly small-scale industries.
Key benefits highlighted by MAN include:
- Exemption for Small Businesses: Companies with turnovers below N100 million will be exempted from Company Income Tax (CIT), Value Added Tax (VAT), and Withholding Tax (WHT). This is seen as a crucial measure to support struggling small businesses.
- Global Alignment: The reduction in company income tax is expected to align Nigeria with global trends, fostering reinvestment and attracting foreign investment.
- Relief for Earners: Low-income earners will be exempt from taxes, while middle-income earners will benefit from more generous reliefs, leading to reduced tax burdens.
- Tax Ombuds Institution: The introduction of a tax ombudsman is anticipated to provide significant relief from the current challenges faced by taxpayers when dealing with tax authorities.
Ajayi-Kadir believes that no cadre of earners will be worse off under the new regime, asserting that even the top two percent of earners, who will pay the highest tax rate, will benefit from their companies’ improved standing under the new tax framework.
The Controversial Legislation and Allegations of Discrepancies
The tax reform legislation, which constitutes a significant overhaul of Nigeria’s tax system, became law on June 26 when President Bola Tinubu signed four major tax reform bills. These include the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act, all intended to operate under a single authority, the Nigeria Revenue Service.
However, the laws have recently come under intense scrutiny following allegations of discrepancies. Abdussamad Dasuki, a member of the House of Representatives, claimed that the versions of the tax laws gazetted and released to the public do not reflect the content debated, voted on, and passed by the National Assembly. This raises serious questions about the legislative process and the integrity of the enacted laws, adding another layer of complexity to the ongoing debate.
