The Budget Office of the Federation has dismissed claims that recent tax reforms will impose a heavier burden on poor Nigerians, describing a widely circulated essay on the issue as rhetorically powerful but fundamentally misleading.
In a detailed rebuttal, the Director-General of the Budget Office, Yakubu, accused the essay of achieving “simplicity by subtraction,” arguing that it deliberately ignored key legal provisions that determine actual tax liability.
“That is not clarity; it is selective accounting,” the Budget Office stated.
Central to the rebuttal is the clarification that pension and health insurance payments are not taxes but deductible welfare contributions.
According to the office, pension contributions are deferred wages held in workers’ Retirement Savings Accounts and remain the property of employees, while health insurance premiums provide defined coverage rather than general government revenue.
“Calling these deductions ‘taxes’ is a category error,” the statement said, stressing that both reduce taxable income under Nigerian law.
The Budget Office also faulted the essay for ignoring the ₦800,000 annual tax-free threshold under the revised personal income tax structure, describing it as the “hinge” upon which liability turns.
Using the example of a worker earning ₦75,000 monthly, the office explained that such an individual earns ₦900,000 annually only ₦100,000 above the zero-rated band. At a 15 per cent rate, this translates to ₦15,000 per year, or ₦1,250 monthly, before deductions.
Once pension contributions are applied, taxable income drops sharply, reducing annual tax to about ₦4,200—or ₦350 per month. With additional health insurance deductions, the worker could fall entirely below the taxable threshold, resulting in zero personal income tax.
“This is not evidence that the poor will be taxed,” the office said. “It is evidence that the argument failed to apply the law it was criticising.”
The Budget Office further criticised the essay’s use of the World Bank’s $4.20-per-day poverty line, noting that the figure is measured in purchasing power parity (PPP) terms and cannot be casually converted into a naira monthly salary benchmark.
“Presenting ₦190,000 per month as a poverty cutoff is not an irrefutable fact it is a political shortcut,” the statement said, adding that global poverty lines were updated in 2025 and are statistical tools, not wage thresholds.
On the claim that widening the tax base necessarily means taxing the poor, the office described the argument as a false syllogism. It said tax base expansion more often involves improving compliance among high earners, closing loopholes, capturing informal but affluent sectors, and strengthening enforcement.
“Nigeria’s problem is not that the poor are escaping tax,” the office said. “It is weak tax-to-GDP performance and over-reliance on borrowing.”
While acknowledging concerns about corruption and public finance management, the Budget Office argued that listing alleged abuses does not invalidate the structure of a tax schedule.
“If accountability is the concern, the answer is transparency, audits, enforcement and prosecution not abandoning taxation,” it said.
The office concluded that the essay’s argument relied on mislabelled deductions, ignored statutory thresholds, misused poverty metrics and replaced computation with moral outrage.
“The new tax structure explicitly shields low incomes,” the statement said. “The outrage only survives by omitting the facts that make it collapse.”
