More Tax? IMF’s Economic Advice to the FG Is Perilous -By Iswell Emmanuel

There comes a moment in the life of every nation when its greatest economic question is no longer how much money can be collected, but how much suffering its people can still endure. Nigeria appears to have reached that moment. At a time when households have been stretched by inflation, subsidy reforms, exchange rate adjustments and declining purchasing power, the suggestion that government should seek even more revenue from the same exhausted citizens sounds less like economic wisdom and more like an invitation to deepen hardship. A nation cannot be taxed into prosperity while its people are being taxed out of hope. Before fresh levies are imagined, a harder question deserves an answer. Has government first exhausted every opportunity to reduce its own appetite for public money?

The International Monetary Fund remains one of the world’s most influential financial institutions, and its advice carries considerable weight, particularly in developing economies seeking macroeconomic stability. Its recent assessment of Nigeria argued that the country’s tax revenue remains among the lowest in the world relative to the size of its economy and urged authorities to improve domestic revenue mobilisation. According to the IMF, Nigeria’s tax-to-GDP ratio remains below 10 per cent, far beneath the average for many African economies. That statistic is accurate and worthy of attention. Yet statistics, however persuasive, must never be separated from the realities lived by ordinary citizens. Economic figures may describe a nation, but they do not always reveal the pain carried inside its homes.

The real question is not whether Nigeria should eventually collect more revenue. Every serious economy requires taxes to finance infrastructure, education, healthcare and security. The real question is timing, sequencing and fairness. It is dangerous to ask citizens for greater sacrifice while government continues to project the image of institutional extravagance. Trust is the currency upon which every successful tax system is built. Where trust is absent, taxation begins to resemble punishment rather than civic responsibility. Even the celebrated economist Adam Smith, observed that “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.” That timeless principle speaks not merely about taxation but about justice.

The irony became even sharper following the Federal High Court judgment declaring the procurement of luxury vehicles worth about ₦110 billion for members of the National Assembly unlawful. Whether the judgment is ultimately sustained on appeal or otherwise, the public perception it created cannot be ignored. Citizens watched billions allocated to official comfort while many families struggled to secure their next meal. According to the latest food security assessments by the United Nations and humanitarian partners, roughly 30.6 million people in Nigeria are projected to face acute food insecurity during the 2025 lean season. Those are not abstract figures. They represent fathers skipping meals, mothers reducing portions for themselves and children whose dreams are slowly being replaced by survival.

Economic management is not only about balancing budgets. It is equally about balancing burdens. If government asks more from its people, it must first demonstrate unmistakably that it is demanding even more from itself. Wasteful expenditure should be trimmed. Multiple official convoys should be reviewed. Endless allowances should be scrutinised. Duplicated agencies should continue to be consolidated where efficiency can be achieved. Public procurement should become stricter, not looser. Every unnecessary expense removed from government books becomes a moral argument in favour of asking citizens to contribute more. Without such discipline, every additional tax will inevitably be viewed as another transfer of wealth from struggling households to an already comfortable political class.

History repeatedly offers the same lesson. States flourish not because they tax the most but because they spend the most wisely. In The Road to Serfdom, Friedrich Hayek warned that economic policy cannot be detached from the institutions that administer it. Likewise, Nobel Prize-winning economist Douglass North wrote, “Institutions are the rules of the game in a society.” Revenue reforms therefore succeed only when institutions inspire confidence. Where leakages remain substantial, where corruption is perceived to be persistent and where public spending appears disconnected from public welfare, increasing taxes becomes a cure prescribed before the disease has been properly diagnosed.

None of this suggests that Nigeria should permanently reject tax reforms. Far from it. A broader tax base built upon economic expansion rather than widespread hardship would strengthen national finances. The informal economy should gradually be formalised through incentives instead of intimidation. Tax compliance should be rewarded with visible improvements in roads, electricity, healthcare, education and security. Economic growth driven by production, industrialisation and employment naturally produces stronger revenue without squeezing those already gasping for economic air.

The conversation Nigeria needs today is therefore larger than taxes. It is a conversation about priorities, accountability and leadership by example. The IMF is right to remind Nigeria that stronger public revenue is essential for long-term development. Yet fiscal consolidation should begin where the greatest discretionary spending exists, inside government itself. Citizens who witness prudence are far more willing to contribute than citizens who witness excess. More taxes imposed upon a weary population without equally visible reductions in the cost of governance would not simply be economically risky. They would be socially combustible. The road to national prosperity is not paved by asking the hungry to carry a heavier burden. It is built by ensuring that those entrusted with public resources are seen carrying the heaviest burden first.

Iswell The Capitalist is an economist and social media personality.
IG: @iswellthecapitalist