Lagos State Governor, Babajide Sanwo-Olu, has urged the inclusion of Micro, Small and Medium Enterprises (MSMEs) and high-net-worth individuals (HNWIs) in Nigeria’s tax framework, stressing the need to curb rising tax evasion and improve national revenue generation.
Speaking through his Special Adviser on Taxation and Revenue, Ogungbo Abdul-Kabir Opeyemi, at the 27th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, Sanwo-Olu warned that current gaps in the tax system are being exploited, particularly by informal businesses and affluent individuals.
The governor highlighted a clause in the proposed tax reform bills that exempts Nigerians earning below ₦800,000 annually from paying Personal Income Tax (PIT), describing it as a potential loophole if not adequately managed. He called for deliberate strategies to track and tax economic activities within the MSME space and among wealthy individuals, particularly through direct assessment mechanisms.
“The clause(s) that puts a cap on income of employees at ₦800,000 per annum, before it can be subjected to Personal Income Tax, requires deliberate strategies to ensure taxpayers hiding in the MSME and start-up sectors are brought into the tax net and intensify effort on Direct Assessment drive for high net worth individuals to forestall the trend of tax evasion as witnessed across the country today,” Sanwo-Olu said.
He also emphasized that sub-national governments should not depend solely on the Federal Government for implementation but should lead the charge by updating relevant tax laws, adopting technology, and building internal capacity.
“It is imperative that as sub-nationals, we not only embrace but also lead the implementation drive,” he added.
Sanwo-Olu urged states to invest in data analytics, staff training, and policy reforms to support the broader tax reforms being pushed nationally. He pointed to Lagos State’s success as evidence of what is possible when reforms are matched with innovation and commitment.
In 2024, Lagos State generated ₦1 trillion in internally generated revenue (IGR), which the governor attributed to reforms that prioritised digital tools and citizen-friendly tax systems. He explained that Lagos’ payer-centric model improved voluntary tax compliance and convenience.
“Our payer-centric system successfully built in conveniences and transformed how taxpayers fulfil their obligations without leaving their comfort zones. This greatly promoted voluntary compliance, hence the ₦1 trillion modest IGR stride achieved by the Lagos State Internal Revenue Service in the 2024 fiscal year,” he noted.
Other tech-driven reforms in Lagos include the deployment of AI-powered chatbots, integration of data analytics, and the harmonisation of tax services on the Lagos Revenue Portal, which has enhanced transparency and operational efficiency.
Sanwo-Olu also drew attention to the broader economic strategies Lagos is pursuing, such as the ₦10 billion MSME fund created in partnership with the Bank of Industry, and the passage of the Lagos State Electricity Law in December 2024 to promote energy independence and reduce pressure on the national grid.
“These elements are critical to realising the full potential of our tax reform efforts, enhancing fiscal capacity, and contributing meaningfully to Nigeria’s overarching goal of attaining a $1 trillion economy,” he said.
While commending President Bola Ahmed Tinubu for championing tax and economic reform agendas, Sanwo-Olu praised CITN for its continued role in shaping Nigeria’s tax ecosystem and pushing for accountability and fairness.
