The disclosure by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, that over 100 million Nigerians are now captured within the tax net is ordinarily a welcome development. A larger tax net increases the potential for higher non-oil revenue. For a country which has long depended on oil income, this is a plus for fiscal stability.

There is, however, a problem that must be addressed urgently. In fairness, people should not be taxed faster than they have opportunities to earn. Therefore, beyond flaunting numbers, the Federal Government must prioritise job creation, income growth, and visible public benefit.

That fewer than 10 million of Nigeria’s about 200-250 million people were previously registered for tax indicated a contradiction that did not bode well for the country’s economic health. A narrow tax base stifles revenue and impedes fiscal planning and the social contract. Consequently, the over 100 million leap suggests improved data integration and reach. It marks success in the attempt to formalise economic activity and correct a long-standing imbalance where a small segment of formal sector workers bore the burden of taxation.

This expansion, however, must be approached with realism because many Nigerians are currently buffeted by widespread poverty. A good number of the citizens now counted within the tax net live at the fringes of subsistence. Many are engaged in informal or irregular work that fetches meagre income as basic needs continue to recede. In such a situation, inclusion in a tax register could merely become a headcount, rather than prosperity or fiscal capacity.

A tax system is worth its name because its constituents are well off economically. It starts to lose its meaning when the taxed earn too little, and often irregularly. At best, it could even amount to fleecing. Regardless of database expansion, the fundamental challenge of revenue generation is unlikely to shift without rising productivity and earnings.

Given the prevalence of communality, many Nigerian households support extended families, absorbing the costs of education and healthcare, among others. The burden is particularly acute in low-income households, where earners sustain multiple dependents. In such circumstances, low tax compliance would not be the result of disregard for civic responsibility but rather financial constraints.

Households are forced to rely on costly alternatives for electricity due to persistent deficiency in supply, thus gnawing away at profits and disposable income. Poor road networks, limited public transport systems and other infrastructure gaps raise the cost of transporting goods and labour. Added to these are security concerns across parts of the country, disrupting production, investment, and imposing additional costs on already strained enterprises. These factors conspire to shape the capacity of individuals and businesses for generating taxable income.

There is also the issue of informal levies and charges that function as de facto taxation outside the formal system. Local actors, unions and associations exact multiple daily or weekly payments from transport operators, market traders, and small-scale entrepreneurs. These charges, sometimes substantial, reduce earnings before formal taxation is even considered. For many, the shrinking margin that follows leaves little or no room for compliance with official tax obligations. Reform, therefore, will be incomplete unless it addresses not just statutory taxes but also the larger system that milks off would-be economic gains.

At this point, how tax revenue is utilised becomes a vital question. Many Nigerians are more likely to comply when they are assured of a direct link between what they pay and what they get in return. Where such a connection is weak or non-existent, there is no incentive for compliance, and enforcement becomes the default instrument of collection. The reforms, which include exemptions for low-income earners and the removal of taxes on basic needs, admit the need to ease burdens. However, trust is not established by relief measures alone. Rather, it is built through a consistent delivery of public goods.

Tax policy must be transparent and accountable. It is not enough that the Federal Government publishes figures or announces reforms. There must be a demonstration of how resources are allocated and what changes or improvements they produce. Budget implementation should be subject to scrutiny. Ordinary Nigerians must be able to see the direct impact of their contributions in projects nationwide; otherwise, the expansion of the tax net would be perceived as an expansion of obligation without a corresponding expansion of benefit.

Tax largely remains a sensitive subject in public discourse. The controversies that dogged the recent reforms could not have highlighted it better. The government must engage with citizens regularly. It must explain changes made, why they matter, and how they affect different segments of the population. A tax system that is not understood is unlikely to be trusted.

The sustainability of Nigeria’s tax reforms depends on aligning the government’s fiscal ambition with economic reality. Expanding the tax net is necessary, but the authorities must invest in reliable power supply, efficient infrastructure, security of life and property, and a regulatory environment that encourages enterprise. There must be vigorous job creation backed by policies that enable businesses to grow and employ. Income growth, particularly at the lower end of the distribution, must become a central objective of economic policy.

With improved access to quality education, healthcare, and basic social protection, the vulnerability of households reduces while their capacity to participate in the formal economy is strengthened. When Nigerians see that their contributions support systems that support them, compliance ceases to become an imposed duty.

The expansion of Nigeria’s tax net provides an opportunity to deepen the relationship between government and the governed. However, this window could remain closed if reform is limited to enumeration and enforcement. There must be a corresponding transformation of public service delivery, and of institutional credibility.

A tax system becomes sustainable when its taxable entities believe it is fair, reciprocal, and representative of their shared purpose. The task before the Federal Government is to convert the current numerical gains into substantive progress, to match fiscal reach with economic inclusion. It must ensure that every request for contribution is met with a demonstrable commitment to the public good. Only then will an expanded tax base make sense to over 100 million Nigerians.