Alliance Urges FG to Reject IMF Tax Proposals, Offers 7-Point Recovery Plan

• Urges FG to review generous incentives, exemptions granted to oil and gas, other large corporations 

• CPPE faults fund’s support for monetary tightening, advocates development financing

James Emejo in Abuja and Dike Onwuamaeze in Lagos

The Alliance for Economic Research and Ethics (AERE) has urged the federal government to reject the International Monetary Fund’s (IMF) recommendation for additional taxes on fuel and telecommunications services, warning that such measures could worsen poverty, stifle businesses and undermine ongoing efforts to stimulate economic recovery.

Instead, the policy think tank proposed a seven-point reform agenda which it said would strengthen government finances, improve revenue generation and support economic growth without imposing fresh burdens on Nigerians.

In a policy response to the IMF’s latest assessment of the Nigerian economy, Alliance argued that the country’s immediate challenge is not insufficient taxation but weak revenue administration, high production costs, revenue leakages and a worsening poverty situation.

Similarly, the Centre for Promotion of Private Enterprise (CPPE) also expressed concern over IMF’s support for continuance of monetary tightening without sufficient consideration of the adverse consequences for investment, enterprise growth, job creation and sovereign debt service pressures.

Chief Executive Officer of CPPE, Dr. Muda Yusuf, in a public statement titled, “IMF Article IV Report on Nigeria: Commendable Diagnosis, But Greater Policy Balance Is Required,” emphasised that development financing remained an economic necessity.

However, AERE called on the government to reject new taxes on fuel and telecommunications in 2026; focus on improving tax administration and compliance; rationalise tax expenditures enjoyed by extractive industries and large corporations and reduce the cost of governance.

It said government should lower interest rates to support productive enterprises, expand social protection programmes; and tackle revenue leakages with greater urgency.

According to the think tank, these measures offer a more sustainable route to fiscal stability than imposing additional taxes on consumers and businesses already grappling with elevated living costs.

Essentially, AERE is a policy think tank chaired by Hon. Dele Oye, a former National President, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA).

Oye is the immediate Past Chairman of the Organised Private Sector of Nigeria (OPSN) and Chairman of the Nigeria-Türkiye Business Council (NTBC).

It maintained that the IMF’s recommendations failed to adequately reflect the country’s social realities, particularly the scale of poverty and food insecurity confronting millions of citizens.

Citing recent poverty estimates, the group noted that the number of Nigerians living below the poverty line had risen significantly over the past few years, arguing that policies capable of increasing transport, communication and energy costs could further erode household incomes.

It stated, “The timing is wrong, the targets are wrong, and the consequences would be devastating. Nigeria has already implemented major reforms including exchange-rate unification, fuel subsidy removal, tighter monetary policy and new tax laws. 

“While these measures may have improved macroeconomic stability, their benefits have yet to reach ordinary citizens. The patient needs recovery time, not another surgery.”

The organisation argued that Nigeria’s tax challenge is largely administrative rather than legislative, pointing out that the IMF itself acknowledged that improved tax administration could generate revenues equivalent to about 3.1 per cent of Gross Domestic Product (GDP) without introducing new taxes.

It noted that tax revenue had grown substantially in recent years following reforms at the nation’s revenue agency, but stressed that significant opportunities still exist to improve compliance, formalise economic activities and close collection gaps.

The Alliance also urged the government to review generous incentives and exemptions granted to oil, gas and other large corporations before seeking additional revenues from consumers.

According to the group, substantial fiscal resources could be recovered by rationalising tax expenditures and ensuring that profitable sectors contribute fairly to national development.

Beyond taxation, the think tank called for decisive action to reduce the cost of governance, arguing that rising recurrent expenditure continues to place pressure on public finances, adding that creating fiscal space requires not only higher revenues but also more prudent spending, greater efficiency in public institutions and reforms that reduce waste.

The Alliance further highlighted the burden faced by businesses, describing high lending rates, unreliable electricity supply, foreign exchange volatility, multiple taxation and security-related expenses as “implicit taxes” that significantly increase the cost of doing business.

It noted that many enterprises already contend with borrowing costs far above those in peer African economies, making expansion and job creation increasingly difficult.

The report particularly criticised the IMF’s recommendation for telecom excise duties, noting that telecommunications remains one of Nigeria’s fastest-growing sectors and a key driver of financial inclusion, digital payments and e-commerce.

It said, “Taxing connectivity in today’s economy is equivalent to taxing opportunity. The telecommunications sector has become a critical platform for financial inclusion and economic participation. 

“Increasing the cost of access risks slowing progress in one of the few sectors delivering broad-based benefits to Nigerians.”

The group was equally critical of proposals to extend Value Added Tax (VAT) to fuel products and raise the current VAT rate, warning that such measures would trigger higher transportation costs and renewed inflationary pressures across the economy.

According to the Alliance, fuel prices affect virtually every sector, meaning additional taxes would inevitably translate into higher costs for food, education, healthcare and other essentials.

The think tank also called for a sustained crackdown on oil theft and other forms of revenue leakage, insisting that improved governance and stronger oversight could generate more revenue than new taxation measures targeted at struggling households.

Furthermore, it urged monetary authorities to pursue policies that would gradually lower interest rates and improve access to affordable credit for businesses, particularly manufacturers and small enterprises.

The Alliance maintained that broadening the tax base through formalisation of the informal sector would provide a more durable solution to Nigeria’s revenue challenges than increasing the burden on existing taxpayers.

The report said, “A nation that taxes its poor to please its creditors has confused sovereignty with servitude. Nigeria is sovereign and must choose its own path. 

“That path should focus on expanding opportunity, supporting enterprise, reducing waste and protecting vulnerable citizens rather than imposing new taxes on people already burdened by poverty, inflation and insecurity.”

Nevertheless, Muda Yusuf, said,  “While the IMF’s support for monetary tightening reflects conventional stabilization thinking, CPPE is concerned about the continued emphasis on high interest rates without sufficient consideration of the adverse consequences for investment, enterprise growth, job creation and sovereign debt service pressures.

“The current monetary policy stance has delivered some benefits in terms of inflation moderation and exchange rate stability.

“However, every policy instrument has a point of diminishing returns. Beyond that point, the costs may begin to outweigh the benefits.”

He contended that the cost of credit in Nigeria has reached levels that are becoming increasingly prohibitive for productive investment.

He added that lending rates in Nigeria has remained among the highest in the world, making it difficult for businesses to expand, invest or create jobs.

The CPPE said that high yields on government securities have intensified the crowding-out effect in the financial system and causing capital to gravitate toward financial assets rather than productive assets.

Yusuf said, “An economy cannot achieve sustainable development when financial capital earns higher returns from government financial instruments than from supporting enterprise, innovation and industrialisation.”

The CPPE said that IMF appeared not to sufficiently appreciate the developmental role of targeted financing interventions in an economy like Nigeria.

It said: “Development finance is not merely a policy choice; it is an economic necessity.

“Left entirely to market forces, critical sectors such as agriculture, manufacturing, housing and infrastructure would remain chronically underfunded, thereby constraining productivity, job creation, industrialisation and long-term economic growth.”

Yusuf said that in “an economy where commercial lending is largely short-term, costly and risk-averse, development finance remains indispensable for unlocking productivity, supporting investment, expanding output and driving inclusive growth.

“A purely market-driven financing model cannot adequately address Nigeria’s structural financing gaps.

He said that agriculture cannot sustainably absorb commercial credit priced at prevailing market rates.  

“Development finance, therefore, should not be perceived as a distortion of the financial market; it is often a necessary response to market failure. 

“Economic transformation has historically been supported by development finance institutions across both developed and emerging economies,” Yusuf said.

The CPPE also stated that prolonged monetary tightening has serious impact on public finance through rising burden of debt servicing.

According to Yusuf, “elevated interest rates have significantly increased the cost of domestic borrowing.

“Government bond yields remain exceptionally high, leading to rising debt-service obligations and shrinking fiscal space. 

“A substantial portion of public revenue is now devoted to debt servicing rather than infrastructure, healthcare, education and other growth-enhancing investments.”

He advised that the monetary and fiscal authorities should work collaboratively to design a pathway towards lower borrowing costs without undermining financial stability.

He also said that the recent indication by the Minister of Finance that the federal government might refinance portions of its debt portfolio to reduce debt service costs is a step in the right direction.

“Debt service remains one of the most significant fiscal challenges facing the country, making it imperative to fast-track measures that can lower financing costs and improve public sector financial resilience,” he said.

The CPPE boss, however, shared the IMF’s views on concern Nigeria’s growing dependence on foreign portfolio inflows and the positive outcomes of the country’s economic reforms in restoring macroeconomic stability.

He said, “After years of macroeconomic distortions, the economy is gradually moving from a regime of instability to one of greater predictability.”

The centre further remarked that “economic reforms are ultimately judged not only by their impact on macroeconomic indicators but by their ability to improve the welfare of citizens.

“Exchange rate stability, reserve accumulation and fiscal consolidation are important, but the true test of reform is whether they translate into lower food prices, better jobs, improved incomes and enhanced living standards.

“The next phase of economic management should, therefore, focus on converting macroeconomic gains into welfare gains.

“The challenge before policymakers is no longer merely one of economic stabilisation; it is increasingly one of inclusive prosperity.”