5 key points on Nigeria’s proposed wealth tax — Experts

The recent proposal by the Federal Government of Nigeria to impose a 25% personal income tax on the wealthiest citizens has sparked a range of expert opinions.

Here are five main takeaways from financial experts on the potential impact of the proposed wealth tax:

Reducing Inequality and Boosting Revenue

Financial experts view the wealth tax as a method to reduce income inequality in Nigeria by having the wealthy contribute more to national revenue. By targeting the top earners, the government aims to create a more equitable financial system where the wealthiest shoulder more responsibility for public welfare.

Learning from International Models

Chartered Institute of Taxation of Nigeria (CITN) President, Mr. Samuel Agbelaye, pointed to Sweden’s 45% minimum tax on top earners as an example Nigeria could emulate. Such international comparisons suggest that taxing the wealthy could foster better public services and economic stability without deterring prosperity.

Encouraging Elite Engagement in Politics

Experts argue that higher taxes on the wealthy could foster greater political involvement and accountability from Nigeria’s elite. By contributing more, affluent citizens may push for better governance, leading to more efficient provision of public goods.

Expanding the Tax Base to Wealthy Individuals and Corporates

Former CIBN President Mr. Okechukwu Unegbu suggested that the tax should include corporate executives and affluent individuals without clear income sources. This approach broadens the base and targets wealth more comprehensively, ensuring affluent lifestyles contribute to national revenue.

Ensuring Proper Management of Revenue

– Experts emphasized that the government must prudently manage the additional revenue from this tax policy to gain public support. Efficient spending on infrastructure, education, and healthcare could increase trust and encourage compliance among taxpayers.