Lagos State Governor, Babajide Sanwo-Olu, has called for the inclusion of more Micro, Small, and Medium Enterprises (MSMEs) and high-net-worth individuals in Nigeria’s tax system as a means to tackle rising tax evasion and strengthen revenue collection.
Sanwo-Olu, who was represented by his Special Adviser on Taxation and Revenue, Ogungbo Abdul-Kabir Opeyemi, made the appeal on Tuesday at the opening of the 27th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja.
In his message, the governor highlighted a clause in the new tax reform bills awaiting constitutional approval that exempts employees earning less than N800,000 annually from Personal Income Tax. He expressed concerns that this provision creates a gap in the tax system, particularly for individuals in the MSME and start-up sectors, who may be evading taxes.
“The clause that exempts employees earning below N800,000 per year from Personal Income Tax needs to be addressed. We must implement deliberate strategies to bring taxpayers in the MSME and start-up sectors into the tax net. Additionally, a stronger focus on Direct Assessment for high-net-worth individuals is necessary to prevent the widespread tax evasion currently observed across the country,” Sanwo-Olu said.
The governor also urged state governments to take a proactive role in implementing the reforms, stressing that they should not rely solely on the federal government.
“As sub-national governments, we must embrace and lead the drive for tax reform implementation,” he stated.
Sanwo-Olu further emphasized the importance of policy commitments at the state level, including updating laws, adopting new technologies, investing in data analytics, and developing human capital to fully capitalize on the benefits of tax reform.
In his speech, the governor used Lagos as an example of effective tax administration, citing the state’s achievement of generating N1 trillion in internal revenue in 2024. This milestone, he said, was the result of the state’s digital reforms and a taxpayer-friendly approach to compliance.
“Our payer-centric system has been designed to make it easier for taxpayers to meet their obligations without leaving their homes. This has greatly encouraged voluntary compliance, contributing to the N1 trillion internal revenue achieved by the Lagos State Internal Revenue Service in 2024,” he said.
Sanwo-Olu also noted that Lagos had deployed artificial intelligence chatbots to engage citizens, integrated data analytics into tax collection processes, and created a harmonized platform, the Lagos Revenue Portal, to improve efficiency and transparency.
Additionally, the governor pointed to initiatives such as the N10 billion partnership with the Bank of Industry to support MSMEs and the passage of the Lagos State Electricity Law in December 2024, which promotes energy self-sufficiency and reduces reliance on the national grid.
He concluded by reiterating the vital role of fiscal reforms in national development, stating, “These reforms are critical to unlocking the full potential of Nigeria’s tax system, enhancing fiscal capacity, and contributing to the goal of achieving a $1 trillion economy.”
While commending President Bola Tinubu for his leadership in driving tax and economic reforms, Sanwo-Olu also praised CITN for its dedication to fostering a resilient tax culture in Nigeria.
