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Nigeria faces an annual financing shortfall of over US$10 billion to meet its Sustainable Development Goals (SDGs). A new report, 'Taxing the Rich: Nigerian Fair Tax Monitor Thematic Report,' reveals how progressive taxation of high-net-worth individuals can reduce inequality and significantly boost national revenue.
This report, published by Tax Justice Network Africa (TJNA), Oxfam Nigeria, Civil Society Legislative Advocacy Centre (CISLAC), and Oxfam Novib, analyses Nigeria’s tax system and reveals the disproportionate tax burden on the poor and the vast untapped revenue potential from taxing the ultra-wealthy.
The findings show that the richest one percent of Nigerians hold 25.5 percent of the nation’s wealth, while the bottom 50 percent own only 4.7 percent. At the same time, 99 percent of high-net-worth individuals evade taxation, contributing to Nigeria’s low tax-to-GDP ratio of just six percent.
The introduction of a progressive net wealth tax could generate over US$6 billion annually, which is enough to double Nigeria’s health budget. A one percent tax on stock shares alone could raise approximately US$492 million annually, yet Nigeria’s property tax system remains inequitable and underutilized.
The failure to adequately tax the wealthiest individuals in Nigeria exacerbates economic inequality and weakens the country’s ability to fund essential public services. Without comprehensive tax reforms, revenue shortfalls will continue to place an undue burden on low- and middle-income earners. This results in a system where those who can least afford it are expected to contribute the most, deepening social and economic disparities.
By focusing on progressive taxation, Nigeria has an opportunity to reallocate resources more equitably, ensuring that wealthier individuals contribute their fair share to national development.
The report also highlights the role of tax exemptions and incentives, which often disproportionately benefit the wealthy while failing to generate meaningful economic growth. Large corporations and high-net-worth individuals frequently exploit legal loopholes to minimize their tax liabilities, further reducing government revenue.
Strengthening tax compliance through better enforcement, closing loopholes, and increasing transparency are key steps toward a fairer tax system. Additionally, reforms in property taxation and the introduction of a direct net wealth tax could create a more balanced and just fiscal framework.
One of the major challenges facing tax reform in Nigeria is enforcement. The lack of a comprehensive wealth registry, inadequate auditing mechanisms, and weak institutional oversight have allowed tax evasion to thrive.
By investing in robust tax administration infrastructure and leveraging digital technologies, Nigeria can enhance its capacity to track wealth and enforce tax obligations. Countries that have successfully implemented progressive tax policies, such as South Africa and Kenya, provide valuable lessons on how targeted tax policies can drive revenue growth and social development.
Nigeria is at a critical juncture where extreme poverty is on the rise, and essential services remain underfunded. Taxing the ultra-rich fairly can provide much-needed fiscal space to improve public services, infrastructure, and economic development. Without decisive action, the widening gap between the wealthy elite and the majority of Nigerians will continue to threaten social cohesion and economic stability.
To access the full report, please visit https://tjna.me/4h0onrR
For more information on our work, please contact izulu[@] taxjusticeafrica.net.