Economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, has warned that Nigeria’s aggressive taxation approach could undermine investment, slow business growth, and weaken job creation if not carefully managed.
Speaking in an interview on ARISE News on Sunday, Yusuf said concerns about the federal government’s tax direction are understandable, particularly given what he described as a policy leaning towards revenue generation.
“Well, I think those fears can be justified to some extent. Because there is a tendency to feel that given the disposition of the president himself, the president who has some bias for aggressive taxation, then, yes, then doing that, Mr. Taiwo Oyedele too, essentially a tax person.”
Despite these concerns, Yusuf noted that the government had repeatedly assured that its tax reforms would not target vulnerable segments or stifle investment.
“But if you have listened to conversations around issues of the fiscal operations of government, even at the time when we started this tax reform, there was a recurring message from the presidency, which was that they were not going to tax investments, they were not going to tax poverty, and they were going to tax prosperity.”
He, however, cautioned that an excessive focus on revenue targets could have unintended consequences for the broader economy.
“And when there is too much of that fixation, it hurts development. And sometimes it hurts welfare.”
Yusuf stressed that increased tax pressure on investors could directly affect business expansion and employment generation.
“Because if there is too much pressure on investors, it will be difficult for them to grow their business, to create jobs.”
He further warned that the dominance of tax and financial considerations in policymaking could overshadow critical economic and social priorities.
“So the tendency is that when you have too many accountants or tax people in government, there is a tendency that there will be dominance of the financial objectives, sometimes to the detriment of the social objectives, investment objectives, or growth objectives.”
On the introduction of the vehicle “green tax” and broader fiscal measures, Yusuf explained that the policy includes incentives aimed at supporting local production and encouraging environmentally friendly practices.
“The whole idea is to focus on production, to encourage more.”
He noted that electric vehicles, mass transit vehicles, and lower engine capacity cars were exempted under the policy.
“So things like electric cars and things like that were completely exempted. Mass transit vehicles were also exempted.”
However, he raised concerns about increased tariffs on used vehicles, which he said could disproportionately affect the middle class and those reliant on road transport for livelihoods.
“Now you now have an increase to 40 percent, you know, from around 35 percent. That is huge.”
Yusuf highlighted that when combined with other charges, the total cost burden could rise significantly.
“By the time you add other components of charges like VAT, like the import charges and so on, the tariff will be coming to around 50 percent.”
He pointed out that this could impact sectors such as ride-hailing services and small businesses that depend on affordable vehicles.
“For an economy that is heavily dependent on road transportation, and for an economy where a lot of use are making a living out of this E-Hailing, Uber and the rest of them, I think that is something that we need to look at.”
While acknowledging that the green tax framework includes some concessions, Yusuf said clarity is still needed on how certain categories of vehicles will be treated.
“Well, it’s not, it’s not quite clear.”
On the broader question of economic priorities, he emphasised the need for greater investment in mass transit systems to reduce reliance on private vehicles.
“We need an economy where there’s a lot more investment in mass transit.”
He noted that while current policies provide some concessions for mass transit imports, further reductions could encourage more investment.
“What we are even saying is that it should even come down much lower. You know, come down to around 5%.”
Yusuf also raised concerns about transparency and accountability in public finance management, calling for improvements across all levels of government.
“No, no, there’s a lot of improvement that needs to happen as far as that is concerned.”
He stressed that government must strike a balance between revenue generation, economic growth, and citizens’ welfare.
“We need to be mindful of the economic objectives of government, that’s developing businesses, growing the economy. We also need to be mindful of social objectives, the welfare of the people.”
According to him, these priorities are fundamental benchmarks for assessing government performance.
“These objectives are very critical to any form of government. It’s a constitutional responsibility of government.”
Faridah Abdulkadiri
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