Effects of President Tinubu’s Tax Reform on Northern Nigeria and Strategies to Boost Revenue -By Yasir Shehu Adam

The new tax reform introduced by President Bola Ahmed Tinubu’s administration has ignited serious concerns, particularly across northern Nigeria. The reform shifts the focus of revenue sharing from population size or equal distribution to a system based on how much tax each state generates. While this approach aims to reward productivity, it places northern states at a clear disadvantage compared to their southern counterparts like Lagos and Rivers, which already lead in tax generation.

For decades, northern states have heavily relied on federal allocations to fund essential services such as education, healthcare, and infrastructure. This reform threatens to shrink their share of federal revenue, making it harder to provide these critical services. The likely result? Worsening poverty levels and an even wider gap in development between the North and the South.

A major part of the northern economy is built around informal markets—livestock trading, small-scale farming, and food sales. These markets largely operate outside formal tax systems, relying on cash transactions and traditional methods. Introducing taxes here could be met with resistance, as many traders are not used to paying formal taxes and may not immediately see the benefits. If implemented poorly, the reform risks driving small traders out of business, further deepening economic struggles in the region.

Northern leaders must act swiftly and strategically to turn this challenge into an opportunity. Here are some actionable ways to boost tax revenue while protecting livelihoods:

1. Organize Markets Effectively

Governors should work to formalize markets by creating well-structured trading hubs where traders can operate in a secure and organized environment. Charging small, fair fees in exchange for better facilities and services can encourage traders to comply without feeling burdened.

2. Collaborate with Community Leaders

Traditional and market leaders can play a key role in bridging the gap between governments and the people. With their involvement, local traders are more likely to trust the system and contribute willingly.

3. Showcase Tax Benefits

It’s not enough to collect taxes—people need to see the results. Revenue should be channeled into visible projects like fixing roads, providing clean water, upgrading markets, and improving security. When traders see tangible benefits, they will be more willing to pay their share.

4. Educate and Engage

Awareness campaigns are vital. Governments must explain the importance of taxes in simple terms that resonate with ordinary people. Highlighting how taxes directly benefit businesses and communities can change perceptions and foster compliance.

A Path Forward for Northern Nigeria

President Tinubu’s tax reform, though challenging, presents an opportunity for northern states to rethink their economic strategies. By embracing fair taxation, improving governance, and strengthening community collaboration, the North can gradually reduce its reliance on federal allocations.

This journey will not be easy, but with proper leadership, the northern states can rise above the challenges, turning the reform into a stepping stone for economic growth and development. It’s a chance to build a more self-reliant and prosperous region.