Despite efforts to expand Nigeria’s tax net and improve revenue generation through various reforms, over 110 million Nigerians still live in poverty, according to Ade Ipaye, former Deputy Chief of Staff to the President.
Speaking during a paper presentation titled “Tax Law and Administration: Challenges of Compliance” at the ongoing 27th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, Ipaye expressed concern that the increasing tax collection has not translated into meaningful improvements in infrastructure, public services, or poverty alleviation.
He emphasized the urgent need for a more inclusive, transparent, and trust-based tax system that truly reflects the principles of social exchange and delivers tangible benefits to citizens.
Ipaye emphasized the need for a taxpayer-centered approach to tax administration in Nigeria, stressing that trust, simplicity, and technological advancement are key to improving compliance and expanding the tax net.
Read also: CITN president urges stronger tax policy alignment
Ipaye argued that coercive methods such as arbitrary enforcement, business closures, and the imposition of penalties often alienate taxpayers and push many into informality. According to him, the focus should shift from confrontation to collaboration.
“We should not build walls that push people into the informal sector,” he said, warning that such tactics encourage evasion and complaints rather than cooperation.
Instead, Ipaye advocated a service and trust-based model where tax administrators act more like customer service agents, explaining, guiding, and encouraging compliance rather than punishing non-compliance.
He drew from his experience in Lagos, where taxpayer engagement and modest presumptive assessments for informal sector operators significantly improved revenue collection.
“We were able to move up the number of taxpayers in the net,” he noted, attributing the success to openness, education, and a less aggressive approach.
Technology, he stressed, holds transformative potential for tax administration by enabling transparency, monitoring, and efficiency.
However, he cautioned that privacy must be safeguarded and that tax authorities must operate within clearly defined limits.
“We shouldn’t intrude into people’s personal matters just because we have access,” Ipaye warned.
He also called on the Chartered Institute of Taxation of Nigeria (CITN) to continue playing its statutory role in regulating tax education.
According to him, a well-structured curriculum, continuous professional development, and high educational standards are necessary to ensure competence and public confidence in the system.
Ipaye underscored the importance of simplifying tax rules to bring informal sector players into the fold and called for expanded capacity building for tax administrators to handle increasing responsibilities with competence and empathy.
Touching on the broader philosophical underpinning of taxation, he explained that tax compliance reflects a social contract where citizens pay taxes in exchange for government services and infrastructure.
He highlighted the growing distrust between citizens and government as a major barrier, especially when benefits from taxes paid are not directly visible.
“About 40% of taxes collected are used for administrative overheads, leaving little for development,” he noted, while also citing high levels of poverty and inequality, over 110 million Nigerians living below the poverty line as evidence of the disconnect.
Ipaye criticized the complexity of Nigeria’s tax laws and administrative procedures, which he said create room for non-compliance and manipulation.
He stressed the need for clearer laws and more transparent processes, arguing that effective enforcement is undermined by the limited capacity of tax officials.
Read also: Oil firms owe Nigeria $6bn in taxes, says Falana
During a panel discussion that followed, Dick Iri, Coordinating Director, Federal Inland Revenue Services (FIRS), echoed similar sentiments, praising the FIRS for its recent reforms. Iri noted that the FIRS has shifted towards a more segmented and people-focused model.
“This approach targets large taxpayers differently from micro or small taxpayers, ensuring tailored solutions and better service delivery”, he added.
Iri highlighted that people, processes, and technology form the backbone of effective tax administration.
He stressed the importance of building the right capacity among tax officers and utilizing technology not just for automation, but for transparency and reduced human interference.
“When discretion is removed from the system, taxpayers know what to pay and when,” he said.
However, he acknowledged challenges in the adoption of technology, especially among taxpayers with limited digital literacy.
To bridge this gap, he advocated for simplified and user-friendly platforms supported by extensive taxpayer education to ensure that digital tools enhance compliance rather than become barriers.
