The Director-General of the Budget Office of the Federation, Mr. Tanimu Yakubu, has dismissed claims that recent tax reforms amount to taxing the poor, describing a widely circulated essay titled “Bola’s Tax” as rhetorically persuasive but analytically misleading.
In a rejoinder issued in Abuja on Wednesday, 7 January 2026, Yakubu said the argument in the essay was built on “simple misdirection,” accusing its author of omitting key legal provisions that determine actual tax liability under Nigeria’s personal income tax framework.
Yakubu clarified that pension and health insurance payments, cited in the essay as evidence of increased taxation on low-income earners, are not taxes but deductible contributions. According to him, pension contributions represent deferred wages owned by workers and paid into their Retirement Savings Accounts, while health insurance payments are premiums for defined coverage, both of which are recognised deductions in personal income tax computations.
“A deduction is not a tax, and a contribution that remains the property of the worker cannot be framed as a government levy,” he stated.
The Budget Office chief also highlighted what he described as the central omission in the essay: the ₦800,000 annual tax-free threshold introduced under the new tax structure. He explained that income below this threshold attracts a zero per cent tax rate, a provision he said fundamentally alters the tax burden on low-income earners.
Using an example of a worker earning ₦75,000 monthly (₦900,000 annually), Yakubu said only ₦100,000 of such income would fall above the zero-rated band. At a 15 per cent rate, this would translate to an annual tax of ₦15,000 before deductions. With pension contributions applied, he noted, the taxable portion could drop significantly or even fall below the tax-free threshold, resulting in no personal income tax liability.
Yakubu further criticised the essay’s use of the World Bank’s $4.20-per-day poverty line, arguing that it was improperly converted into a nominal naira salary benchmark. He explained that the figure is based on purchasing power parity (PPP) and is intended for statistical welfare analysis, not as a direct exchange-rate-based income threshold.
On the issue of “widening the tax base,” the Budget Office DG said the essay wrongly equated the concept with taxing the poor. He argued that broadening the tax base typically involves improving compliance among high earners, closing loopholes, strengthening employer withholding systems, and capturing revenue from affluent segments of the digital and informal economy.
“Nigeria’s revenue challenge is not that the poor are escaping taxation, but that compliance and tax-to-GDP performance have historically been weak,” he said.
Yakubu also dismissed lengthy references in the essay to alleged corruption and misuse of public funds as irrelevant to the structure of the tax schedule. While acknowledging the importance of accountability, he maintained that governance concerns do not invalidate the arithmetic of tax thresholds and deductions.
He concluded that the controversy surrounding the reforms was driven by what he described as deliberate omissions, including the zero per cent tax band, the legal treatment of deductions, and the technical meaning of poverty metrics.
“The new structure explicitly shields low incomes, while pension and health insurance deductions are welfare features, not stealth taxes,” Yakubu said, adding that debates on taxation should be grounded in accurate application of the law rather than emotive narratives.
