Nigerians have reacted angrily to the recommendation of the International Monetary Fund, IMF, to the Nigerian government to impose more taxes on telecommunication services and petroleum products.
It is also noteworthy that the IMF recently recommended the imposition of taxes on fuel products and telecommunications services in Nigeria as part of wider measures to boost government revenue and create fiscal space for development spending and social interventions.
This was included in its Article IV report on Nigeria.
Past experiences with the IMF reported that the reactions that followed were spontaneous.
Following recommendations contained in the latest IMF Article IV Consultation Report on Nigeria, Nigerians have continued to speak against the recommendation that Nigeria had adopted or was considering the introduction of new taxes on telecommunications services and petroleum products, though Nigeria has dismissed reports suggesting so.
The government, in a statement, said the recommendations in the IMF report were not binding on Nigeria and should not be taken as official government policy.
It said decisions on taxation could only be taken through constitutional and legislative processes and will be guided by national priorities and prevailing economic realities.
“The IMF Article IV Consultation Report presents the Fund’s assessment of the Nigerian economy and recommendations for authorities’ consideration. These recommendations are not government policy and do not bind Nigeria.
In a part of the statement, it said: “Decisions on tax matters are taken through established constitutional and legislative processes and are informed by national priorities and prevailing economic realities.
Some Nigerians believe such taxes would cripple businesses and deepen hardship and completely destroy whatever economic gains the present government had made in the last three years.
Dele Oye, chairman of the Alliance for Economic Research and Ethics LTD/GTE, is one of the most vocal critics of the negative effects of such taxes.
He contended that such measures were insensitive and would further cripple businesses and deepen hardship for over 140 million poor Nigerians.
Oye said Nigeria could increase its revenue without levying new taxes on struggling households and businesses, noting tax collections had grown by more than 180 percent in three years from N10.1 trillion in 2022 to N28.3 trillion in 2025.
He said imposing fresh taxes on fuel and telecom services at a time when it is estimated that 140 million Nigerians are living below the poverty line would be to impose a heavier burden on citizens already grappling with inflation, high living costs and weak purchasing power.
Nigerian businesses are already under pressure from what he called hidden taxes like high borrowing costs, unreliable electricity, multiple levies at different levels of government, foreign exchange volatility and security-related costs.
He pointed out that high commercial lending rates of more than 35 percent and rising energy prices have further increased the cost of doing business, and warned that additional taxes will discourage investment and slow down economic growth.
“There is also a Lagos lawyer, Bolu Oyeniyi, who is also knowledgeable in tax matters, who questioned the rationale for the introduction of new taxes when there is potential for huge additional revenue from improvements in tax administration, pointing to the IMF’s own assessment that administrative reforms alone could yield gains comparable to those expected from new tax measures.
He wants the Federal Government to improve tax compliance, cut the cost of governance, plug revenue leakages, formalise more of the informal economy and review tax incentives enjoyed by large corporations and extractive industries instead of imposing new levies.
He warned that taxing telecommunications would hurt digital inclusion and financial innovation, while additional taxes on fuel would ripple through the economy by raising transport costs and food prices.
He urged the government to focus on economic recovery, not new taxes, and to create an environment for businesses to grow and create jobs, instead of adding to the burdens on consumers and entrepreneurs.
“The patient needs time to recover, not another surgery,” he said, urging the government to ignore the IMF recommendations on telecom and fuel taxes and pursue reforms that expand the economy, not deepen hardship.
Also criticizing the IMF’s recommendation is Lanre Adebowale, a civil servant with the Lagos State Ministry of Commerce, who warned the government to reject any further advice or recommendation from the international monetary agency.
“I remember how the same IMF advice in 1986 to the military government of Gen Ibrahim Babangida threw Nigeria into serious economic quagmire from which she has not been able to extricate herself till date.
He warned that no advice from the IMF will ever be good for any Nigerian, but will only bring more economic woes to Nigeria.
“I remember well how the Babangida government destroyed Nigeria by borrowing from the IMF. Then, one of the conditions to get the loan was for the government to put in place an economic policy called the Structural Adjustment Programmes (SAPs).
This was the genesis of Nigeria’s economic crisis, which we are still grappling with till date, he said.
He lamented that the programmes designed to stabilise struggling economies, reduce government deficits and move nations toward market-driven and globally competitive systems, ended up destroying Nigeria’s economy and inflicting grievous pains on Nigerians.
He said the programmes’ core components were currency devaluation, privatisation, cut in public spending, market liberalisation and tax reforms.
“This is how state owned companies like Nigeria Telecommunications Limited, NITEL, Nigeria Hotels, Nigeria Airways and many other public companies which were the pride of Nigeria were sold at throw away prices to few ‘connected’ individuals.
“It is the same IMF that has come again to recommend that our government should tax Nigerians again on petroleum products and telecommunications service. Remember that most home businesses have collapsed due to the lack of electricity and the price of fuel to power the generators has gone beyond the reach of ordinary people at above N1200 per litre of petrol.
“Note also that Nigerians pay the highest for data among other nations of the world, a development that is still generating public outcry.
And here we are reading about a recommendation from the same IMF to increase taxes on these products and services.
This is rather unfortunate. The good news is that the government has come out to say that it is not considering any further taxes on telecoms and petrol.
“That’s good enough, but going forward, I advise that Nigeria should not be listening to the IMF because it will always give advice that will favour it and not the one that will favour Nigeria,” he said.