Former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has expressed deep concerns over the new tax laws that came into effect on January 1, 2026, warning that without trust, transparency, and accountability, the reforms could undermine Nigeria’s fragile social contract, news.ng reports.
In a detailed commentary on the implementation of the Nigeria Tax Acts passed in 2025, Moghalu argued that the core challenge facing taxation in Nigeria is not the concept itself, but the credibility of the government in managing public resources.
“The problem is not taxation per se. It’s a core aspect of the social contract. It’s the issues of absence of trust in government in a country where there is so much official corruption (‘authority stealing’): will the revenues raised from taxation be accountably spent on the welfare of citizens? Or will they be ‘privatised’ through various kinds of arrangements and ‘consultancies’?” he said.
Moghalu questioned how Nigerians could be confident that new tax revenues would be handled differently, given the country’s history of mismanaged oil wealth.
“Much of previously earned revenue from oil has been stolen, so how will this new taxation be different? Nigerians deserve to know. A social contract has yet to be established in Nigeria,” he stated.
He warned that failure to address these trust deficits could lead to serious democratic consequences, drawing a historical parallel.
“If this is not done, the tax laws might end up as ‘taxation without representation’ that led the Americans to fight their British colonialists in the 18th century to establish their country’s independence.”
Beyond trust issues, Moghalu also raised concerns about what he described as serious legitimacy problems surrounding the passage of the tax laws. He pointed to discrepancies between the initially gazetted version of the legislation and a later “certified true copy.”
“The very significant alterations in the initially gazetted version… indicate a clear intention to defraud Nigerians by those who inserted those alterations that established ‘revenue streams’ that would have gone straight into private pockets. This was a brazen and unconstitutional breach,” he said, calling for accountability.
“Will the culprits be found and held accountable?”
On the issue of timing, Moghalu acknowledged that taxation is often unpopular but noted that Nigeria’s current economic realities have worsened public perception of the policy.
“There is never a good time to tax. Also, it appears that efforts have been made to reduce the tax burdens of poor people. Poverty in Nigeria is sky high today. So, the timing created a perception problem — that of ‘taxing the poor’.”
He further argued that Nigeria’s deeper governance challenges make aggressive tax reforms premature, stressing that wealth creation should come before taxation and redistribution.
“We have fundamental problems of governance. We must first create broad-based wealth before we can either tax it or redistribute it effectively. Putting the cart before the horse is not optimal public policy,” Moghalu said.
The former CBN deputy governor also criticised the high cost of governance and the lack of transparency in managing existing revenues, including savings from fuel subsidy removal.
“The profligate cost of governance in our country indicates that we are unwilling to manage the revenues we DO have or get, judiciously. The savings from oil subsidy removal are neither apparent nor transparently accounted for, let alone deployed transformationally, and we are still borrowing heavily externally.”
He concluded by stressing that for taxation to succeed in Nigeria, key principles must work together.
“When it comes to taxation, intent, competence, and transparency/accountability must align.”
Moghalu’s intervention adds to the growing national debate over the new tax regime, as Nigerians grapple with rising living costs, governance concerns, and demands for greater accountability from public institutions.
