Alliance Calls On FG To Shun IMF Tax Hikes, Proposes Seven-Point Growth Strategy

Alliance Calls On FG To Shun IMF Tax Hikes, Proposes Seven-Point Growth Strategy

Nigerian policy groups urge rejection of IMF tax proposals, proposing reforms while warning against tight monetary policy impacts.

The Alliance for Economic Research and Ethics (AERE) has urged the federal government to reject the International Monetary Fund’s (IMF) recommendation for additional taxes on fuel and telecommunications services, warning that such measures could worsen poverty, stifle businesses and undermine ongoing efforts to stimulate economic recovery.

Instead, the policy think tank proposed a seven-point reform agenda which it said would strengthen government finances, improve revenue generation and support economic growth without imposing fresh burdens on Nigerians.

In a policy response to the IMF’s latest assessment of the Nigerian economy, Alliance argued that the country’s immediate challenge is not insufficient taxation but weak revenue administration, high production costs, revenue leakages and a worsening poverty situation.

Similarly, the Centre for Promotion of Private Enterprise (CPPE) also expressed concern over IMF’s support for continuance of monetary tightening without sufficient consideration of the adverse consequences for investment, enterprise growth, job creation and sovereign debt service pressures.

Chief Executive Officer of CPPE, Dr. Muda Yusuf, in a public statement titled, “IMF Article IV Report on Nigeria: Commendable Diagnosis, But Greater Policy Balance Is Required,” emphasised that development financing remained an economic necessity.

However, AERE called on the government to reject new taxes on fuel and telecommunications in 2026; focus on improving tax administration and compliance; rationalise tax expenditures enjoyed by extractive industries and large corporations and reduce the cost of governance.

It said government should lower interest rates to support productive enterprises, expand social protection programmes; and tackle revenue leakages with greater urgency.

According to the think tank, these measures offer a more sustainable route to fiscal stability than imposing additional taxes on consumers and businesses already grappling with elevated living costs.

Essentially, AERE is a policy think tank chaired by Hon. Dele Oye, a former National President, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA).

Oye is the immediate Past Chairman of the Organised Private Sector of Nigeria (OPSN) and Chairman of the Nigeria-Türkiye Business Council (NTBC).

It maintained that the IMF’s recommendations failed to adequately reflect the country’s social realities, particularly the scale of poverty and food insecurity confronting millions of citizens.

Citing recent poverty estimates, the group noted that the number of Nigerians living below the poverty line had risen significantly over the past few years, arguing that policies capable of increasing transport, communication and energy costs could further erode household incomes.

It stated, “The timing is wrong, the targets are wrong, and the consequences would be devastating. Nigeria has already implemented major reforms including exchange-rate unification, fuel subsidy removal, tighter monetary policy and new tax laws.

“While these measures may have improved macroeconomic stability, their benefits have yet to reach ordinary citizens. The patient needs recovery time, not another surgery.”

The organisation argued that Nigeria’s tax challenge is largely administrative rather than legislative, pointing out that the IMF itself acknowledged that improved tax administration could generate revenues equivalent to about 3.1 per cent of Gross Domestic Product (GDP) without introducing new taxes.

It noted that tax revenue had grown substantially in recent years following reforms at the nation’s revenue agency, but stressed that significant opportunities still exist to improve compliance, formalise economic activities and close collection gaps.

The Alliance also urged the government to review generous incentives and exemptions granted to oil, gas and other large corporations before seeking additional revenues from consumers.

According to the group, substantial fiscal resources could be recovered by rationalising tax expenditures and ensuring that profitable sectors contribute fairly to national development.

Beyond taxation, the think tank called for decisive action to reduce the cost of governance, arguing that rising recurrent expenditure continues to place pressure on public finances, adding that creating fiscal space requires not only higher revenues but also more prudent spending, greater efficiency in public institutions and reforms that reduce waste.

The Alliance further highlighted the burden faced by businesses, describing high lending rates, unreliable electricity supply, foreign exchange volatility, multiple taxation and security-related expenses as “implicit taxes” that significantly increase the cost of doing business.

It noted that many enterprises already contend with borrowing costs far above those in peer African economies, making expansion and job creation increasingly difficult.

The report particularly criticised the IMF’s recommendation for telecom excise duties, noting that telecommunications remains one of Nigeria’s fastest-growing sectors and a key driver of financial inclusion, digital payments and e-commerce.

It said, “Taxing connectivity in today’s economy is equivalent to taxing opportunity. The telecommunications sector has become a critical platform for financial inclusion and economic participation.

“Increasing the cost of access risks slowing progress in one of the few sectors delivering broad-based benefits to Nigerians.”

The group was equally critical of proposals to extend Value Added Tax (VAT) to fuel products and raise the current VAT rate, warning that such measures would trigger higher transportation costs and renewed inflationary pressures across the economy.

According to the Alliance, fuel prices affect virtually every sector, meaning additional taxes would inevitably translate into higher costs for food, education, healthcare and other essentials.

The think tank also called for a sustained crackdown on oil theft and other forms of revenue leakage, insisting that improved governance and stronger oversight could generate more revenue than new taxation measures targeted at struggling households.

Furthermore, it urged monetary authorities to pursue policies that would gradually lower interest rates and improve access to affordable credit for businesses, particularly manufacturers and small enterprises.

The Alliance maintained that broadening the tax base through formalisation of the informal sector would provide a more durable solution to Nigeria’s revenue challenges than increasing the burden on existing taxpayers.