Tax Ombud warns against revenue-first approach to tax reforms

Nigeria's Tax Ombud has cautioned against prioritizing revenue collection in the country's tax reforms, arguing that without building trust among taxpayers, the system's sustainability could be at risk. Dr. John Nwabueze, Nigeria's first Tax Ombudsman, made this warning at a conference marking the 36th anniversary of the Finance Correspondents Association of Nigeria (FICAN) in Lagos. The conference focused on recapitalization, tax reforms, and fintech advancements.

Nwabueze emphasized that while revenue growth is important, it must go hand in hand with taxpayer confidence for a sustainable tax system. He argued that focusing solely on what citizens and businesses are required to pay is insufficient; taxpayers must also understand the rationale behind the system through which they pay. Nwabueze identified the trust deficit as a more urgent challenge than the low tax-to-GDP ratio in Nigeria, cautioning that legislation and enforcement alone are not enough to drive sustainable revenue growth.

He also clarified that the Tax Ombud was not established to encourage tax resistance or undermine lawful tax administration, but to provide a credible avenue for legitimate grievances to be addressed and resolved. Nwabueze cautioned that while technology has transformed Nigeria's financial landscape, it alone cannot resolve the trust problem. He argued that digital reforms should aim to simplify, make the tax system more accessible and responsive, rather than creating additional barriers for taxpayers.

Nwabueze's remarks highlighted the importance of transparency, accountability, and the taxpayer experience in assessing digital and revenue reforms. He urged journalists to evaluate the success of the reform agenda not just by the revenue collected, but also by whether taxpayers understand their obligations, whether legitimate complaints are resolved fairly, and whether public confidence in tax institutions improves.