Nigeria’s amended Tax Acts promise progressive reforms, but is this information reaching the people it’s designed to protect? We went to the grassroots to understand what informal workers know about the new tax structure.
Our findings reveal a significant awareness gap: most informal earners are unaware that incomes below ₦800,000 annually are tax-exempt, and many don’t understand the tiered structure meant to protect them. The major challenge isn’t unwillingness to pay taxes, but a crisis of trust. Without visible evidence of government intervention in infrastructure, healthcare, or essential services, compliance remains difficult. When citizens cannot connect tax payments to tangible improvements in their communities, tax avoidance becomes an automatic response. Additionally, without adequate communication, fear of taxation is driving informal workers further from formal financial systems. Increased cash transactions, reduced banking activity, and reluctance to register businesses threaten the very financial inclusion these reforms aim to support. The communication gap identified is particularly concerning: information isn’t reaching 80% of Nigeria’s workforce in the informal sector, market traders, farmers, artisans, and micro-entrepreneurs who contribute 58% to GDP. Policy without effective communication cannot achieve its intended impact.
Moving forward requires targeted grassroots campaigns through community and local networks, transparent demonstration of the tax-to-development pipeline, clear communication of exemptions and thresholds, and financial literacy initiatives that demonstrate how formalisation can benefit informal workers, especially at the grassroots level.
