Recent reports that Nigeria’s governing party, the All Progressives Congress (APC), led by Asiwaju Bola Tinubu, is set to commence the collection of taxes from market traders and informal workers has been met with mixed reactions. While some have welcomed the move as a way to increase the nation’s revenue base, others have expressed concern that it could adversely affect the already-struggling informal sector.
The informal sector plays a crucial role in the Nigerian economy, accounting for an estimated 80% of the nation’s workforce and contributing over 50% of the GDP. Therefore, any taxation policy targeting informal workers could have significant implications for the country’s economy.
There are also concerns that this move could lead to further exploitation of informal workers, who lack the resources to comply with taxation regulations. The informal sector is already burdened by a number of issues, including inadequate access to credit, poor infrastructure, and limited legal protection. Any attempt to introduce taxation policies without addressing these issues could result in further marginalisation of informal workers.
Moreover, the collection of taxes from informal workers could lead to a further widening of the gap between the rich and the poor. Already, there is a disparity in the distribution of wealth in Nigeria, with a small percentage of individuals controlling the bulk of the nation’s wealth. This could be exacerbated by the introduction of a taxation policy that targets informal workers.
Meanwhile, the collection of taxes from market traders and informal workers could increase the nation’s revenue base, it is important to ensure that any taxation policy is introduced in a way that does not adversely affect the already-marginalised informal sector. Furthermore, any taxation policy must be designed in such a way that it does not further exacerbate the disparity between the rich and the poor.
—Maazị Ezeoke-rs
