A profound crisis of public confidence is jeopardising the foundation of Nigeria’s ambitious tax reform programme, with a new report revealing that 69% of citizens do not trust the government to spend tax revenue properly. This widespread scepticism, documented in a survey by intelligence consultancy SBM Intelligence, presents a formidable barrier to efforts aimed at increasing the nation’s historically low tax revenue, which is essential for reducing crippling debt, funding public services, and weaning the economy off its dangerous dependence on volatile oil income.
The survey, which sampled 1,616 Nigerians across all geopolitical zones, found that only 31% of respondents expressed any trust in the government’s management of tax funds. This sentiment is most acute in the North-East and South-East regions. The distrust stems from a pervasive perception of poor governance and corruption, with respondents citing a lack of visible returns on existing tax payments. Cheta Nwanze, lead partner at SBM Intelligence, stated the findings reveal a “direct correlation between trust and tax compliance,” noting that citizens question “what exactly the government is doing with the taxes” they already pay. This credibility gap directly undermines the Federal Inland Revenue Service’s (FIRS) campaign to expand the tax net and encourage voluntary compliance.
The economic stakes of this trust deficit could not be higher. Nigeria has one of the lowest tax-to-GDP ratios in the world, at approximately 10.8%, compared to a 16.5% average for other African economies. This chronic underperformance forces the government to rely on borrowing and unstable oil revenues, creating a cycle of budget deficits and mounting debt. The newly enacted tax amendments, including the much-discussed Cybercrime Levy, are designed to broaden the revenue base. However, experts warn that without a concurrent and demonstrable improvement in governance and transparency, these measures will be met with severe public resistance, potential civil disobedience, and could further stifle the struggling formal business sector.
The implications extend beyond mere compliance to the very social contract between the state and its citizens. The report highlights that public willingness to pay tax is inextricably linked to the quality of public services received. Persistent failures in power supply, security, road infrastructure, and education—all routinely cited by respondents—erode the rationale for taxation. Nwanze emphasised that for reforms to succeed, the government must “do a lot more to show itself to be trustworthy,” moving beyond rhetoric to tangible improvements in service delivery and accountable governance. The current approach risks exacerbating inequality, as the burden of new digital and indirect taxes falls disproportionately on the formal sector and salaried workers already within the tax net, while vast informal economies remain largely untapped.
Overcoming this crisis requires a fundamental shift in strategy. Pushing forward with stringent collection drives and new levies without first addressing the core issue of trust is likely to be counterproductive, potentially shrinking the formal economy. A sustainable solution demands a transparent, accountable, and visible link between tax revenue and public goods. This could include clearly communicating how specific tax revenues are allocated to projects, strengthening anti-corruption institutions, and ensuring efficient public service delivery. The success of Nigeria’s fiscal future hinges not just on passing new tax laws, but on rebuilding the eroded trust that makes a functional, modern tax system possible. Without this, the nation’s economic stability and development ambitions remain in peril.
