Tinubu’s Tax Reset and the Rising Cost of Living: Who Really Pays in 2026?
By the start of 2026, the Nigerian economy had crossed a critical psychological threshold. For millions of households, survival, not prosperity, had become the central economic concern. Food prices climbed relentlessly, transportation costs ballooned, electricity tariffs rose, and the naira’s weakness continued to hollow out purchasing power. Wages, meanwhile, remained stubbornly stagnant. In one word: Nigeria’s cost-of-living crisis swirl. This is the economic terrain into which President Bola Tinubu’s administration has launched Nigeria’s most aggressive fiscal overhaul in decades. Framed as reform, sold as necessity, and defended as inevitability, the new tax regime arrives not as a technocratic adjustment but as an additional burden on a population already stretched to its limits. The question confronting Nigerians in 2026 is no longer whether reform is needed, but who bears the cost, and who decides how much pain is acceptable. Reform in the Middle of Hardship The removal of fuel subsidies unleashed a cascade of price increases that reverberated through every sector of the economy. Transport fares surged, food inflation accelerated, and informal businesses, already operating on thin margins, struggled to survive. Electricity tariff hikes followed, further eroding household incomes and raising production costs. Currency policy adjustments compounded the crisis, making imports more expensive and local substitutes scarcer. Rather than pause to stabilize living conditions, the government pressed ahead with sweeping tax reforms. For many Nigerians, the timing alone felt punitive: a state demanding more at the precise moment its citizens had less to give. A New Tax Regime, Old Trust Deficit The overhaul rests on four major laws that replace Nigeria’s chaotic tax framework with a centralized, digitally monitored system. On paper, the logic is compelling: fewer taxes, better enforcement, broader compliance. In reality, centralization without trust risks becoming coercion by another name. Progressive tax bands and exemptions for low-income earners are cited as evidence of fairness. Yet the lived experience tells a different story. Middle-income Nigerians comprising, civil servants, professionals, and small traders, are watching their take-home pay shrink as inflation bites and long-standing reliefs disappear. What remains is a widening gap between what the state demands and what it delivers. “Widening the Net” or Tightening the Noose? Officials insist the reforms are about widening the tax net rather than increasing the burden. But a net cast over a struggling economy does not magically become lighter because it is broader. When energy costs soar, food prices spike, and wages lag inflation, taxation, no matter how elegantly designed, feels punitive. The promise that higher revenue will eventually translate into better schools, hospitals, and infrastructure rings hollow in a country where decades of oil wealth failed to produce durable public value. Nigerians have heard this argument before. Each time, they were asked to be patient. Each time, patience yielded diminishing returns. VAT and Regional Fault Lines: Old Battles, New Weapons No element of Tinubu’s tax reset better exposes Nigeria’s unresolved national question than the proposed restructuring of the Value Added Tax (VAT) sharing formula. Presented by the government as a neutral, efficiency-driven move toward derivation, the reform has instead resurrected the ghosts of Nigeria’s most bitter fiscal conflicts, conflicts never resolved, only postponed. By tilting VAT allocation more decisively toward where consumption and economic activity are recorded, the reform overwhelmingly favours Lagos and a handful of commercially dominant states in the South-West. Lagos’s outsized contribution to VAT revenue is frequently cited to justify this shift. The logic is straightforward: where revenue is generated, revenue should remain. But Nigeria’s history warns that straightforward logic often produces dangerous outcomes. In the First Republic, a strong derivation principle allowed regions to retain up to 50 percent of revenues from cocoa, groundnuts, and palm produce. That system collapsed not because derivation was inefficient, but because widening regional disparities turned it into a political weapon. The fiscal tensions it generated contributed to the instability that ended civilian rule. After the civil war, military governments centralized revenue sharing not out of ideological preference, but because national survival required redistribution. Oil revenues were pooled to hold a fractured country together, not to reward efficiency. The VAT debate now retraces that path, without the trauma that once forced compromise. Many Northern states, heavily dependent on VAT allocations to fund basic services, see the reform not as fiscal federalism but as fiscal punishment. Their argument is blunt: productivity cannot be rewarded fairly in a country where productivity itself has been shaped by decades of uneven federal investment, insecurity, and policy bias. When ports, rail lines, industrial clusters, and financial infrastructure are concentrated in one region, derivation ceases to be neutral, it becomes structural exclusion. The echoes of the Niger Delta struggle are unmistakable. For decades, oil-producing communities watched wealth flow to Abuja while bearing the environmental and social costs of extraction. Today, roles appear reversed: commercially dominant states demand to keep what they generate, while poorer regions warn that redistribution, the glue of the federation, is being quietly dismantled. The federal government’s response, that states should simply “grow their economies,” rings hollow in regions battling insurgency, banditry, collapsing education systems, and mass poverty. Growth is not summoned by rhetoric; it is enabled by security, infrastructure, and human capital, public goods that require funding in the first place. History is unambiguous: Nigeria’s most destabilizing crises often begin as revenue disputes disguised as technical reforms. When groups feel fiscally cornered, resistance follows, political, legal, and sometimes worse. Wether anyone agrees or not, a VAT regime that sharpens inequality without robust equalization mechanisms is not reform, it is deferred instability. The question therefore becomes, wether Nigeria is prepared for another combustive civil disorder? The Lagos Model Goes National The reforms unmistakably bear the imprint of the Lagos model that is notorious for its centralized authority, digital surveillance, and uncompromising enforcement. In Lagos, this model thrived on a dense commercial base and a large formal sector. Nationally, it risks flattening Nigeria’s economic diversity into a one-size-fits-all template. Equally corrosive is the perception, fair or not, that fiscal power is increasingly concentrated within a narrow
People, privations and public policy priorities [2]
By UGO ONUOHA WITHOUT any doubts whatsoever, the twin policies of the unplanned, wrong-headed, and precipitate removal of petrol subsidy and the massive devaluation of the national currency, the Naira, have at the root of the serious problems plaguing Nigeria and the pauperisation of about 200 million citizens. This regime pulled the plug on the alleged subsidy on petrol the same day it assumed office on May 29, 2023. In fact, it did so within the hour of taking office. At the time it did so, there was no full complement of the government. There were no advisers, no assistants, no ministers, no carriers of its vision and mission [assuming that it had any, really] except the structures it inherited from its predecessor, a regime that was widely regarded as a monumental failure and a scourge on our people. It was widely acknowledged that Muhammadu Buhari did not just waste eight years of Nigeria, but that it set the country back by a generation, or 30 years. Buhari’s was a sad case of serial bungling and ‘ungovernance’. He was an affliction. If corruption and industrial scale theft of crude oil in the upstream sector of the industry were the primary problems as were correctly diagnosed by successive administrations, it then follows that the right thing to have been done would have been to visit the root of the challenges with the full weight of the federal government. This regime didn’t. It was the beginning of it getting its priorities wrong. And that was understandable though unacceptable because high ranking government operatives, leading lights in the military, and other collaborators were the crude oil thieves. Those who stole Nigeria’s crude oil in handheld jerry cans or even those who move them in hundreds or thousands of jerry cans in trucks were not our problem. How much damage can they inflict on the national revenue, that’s, if this category of thieves existed? Almost zero. Stories were rife of huge and monster-size tankers criss-crossing our ocean fronts day and night, and their bellies being filled to the brim, and their leisurely sailing away to export markets in the Americas, Europe and Asia. The monster-like vessels were escorted by some members of the armed/security forces of Nigeria safely out of our territorial waters. The proceeds from the sales go to the global syndicate. Everybody knew that the crude was stolen. The ships’ crews were aware. Regulators and monitors of ships’ movements and registers were aware of the illicit business. The buyers were in the know that they were buying stolen products. But they did not care because it was a case of willing sellers and willing buyers. It was immaterial that illegality was written all over the transactions. Read Part 1: People, privations and public policy priorities The then new regime turned a blind eye to the bazaar in the Niger Delta and went for the jugular of the soft target-the hapless and helpless citizens of the country. It deregulated (read taxed ) the downstream sector immediately which opened the floodgates of the problems now besetting the country and her citizens. It was a petrol pump head tax. And every act of taxation comes with consequences. While the majority of Nigerians struggled with coping with basic needs of life, the privileged few with access were allowed sufficient time to clean up their act of illegally lifting crude oil to our collective loss and detriment. Because of the new tax (deregulation), the price of a litre of petrol rose rapidly from less than N200 to about N1,500 between 2023 and 2024. The bottom was knocked off our disproportionately informal economy. The impact of the ill-digested action was swift and severe and crushing. The movement of people and goods was mainly by road, and the majority of cars, buses, and trucks were powered by petrol. So the movement of people was affected. The same for goods. It was a common sight in mid and late 2023 to see trending videos of workers, artisans and traders going to and fro their various destinations on foot. Even up till today some people still cover significant distances on foot before completing their journey by bus or tricycles or commercial motorcycles otherwise called ‘okada’ or ‘inaga’. Many car owners ditched their vehicles and opted for commercial buses or even ‘leggediz Benz’ or ‘footwagon’, a deprecating description of covering distances on foot. The other day, an otherwise respected economist and public intellectual who indeed was one of my teachers during my chief executive programme [CEP] certificate course at the Lagos Business School [LBS], Dr. Bismark Rewane, was lamenting that the patience of Nigerians was being tasked, taxed, and stretched by the unintended fallouts from the policy options adopted by the ruling All Progressives Congress [APC] in the implementation of its economic reforms. I was scandalised but I took solace in the suspicion that he was striving to be seen by the authorities to be politically correct in his public speech. I reminded myself that there were times during the disastrous years of Buhari that the same Rewane spoke in like manner. What could be unintended or unforeseen in inflation spiking and poverty deepening when the price of petrol was raised five fold in a country where petrol played, still plays, an outsized role in the movement of people and goods? In an environment where other modes of transportation are either underdeveloped or non-existent. Rewane’s lamentation was pathetic and patronising. It was nauseating. And an insult to Nigerians. He could not have forgotten that now Nigeria’s president, Alhaji Bola Ahmed Tinubu, had as an opposition politician in January 2012 or thereabout, written an epistle to the then President Goodluck Jonathan opposing the removal of petrol subsidy. Tinubu’s arguments then were unassailable about the dire negative multiplier effects of such action on Nigerians. To now say that the negative fallouts of petrol subsidy removal, and the subsequent mindless devaluation of the Naira soon after were unanticipated, would amount to a gratuitous insult
Subsidy Removal Has Reduced Nigeria’s Fuel Consumption By 33% –Minister
The Minister of State for Environment, Kunle Salako, has said that the courageous decision by Bola Tinubu’s administration to remove fuel subsidy has reduced the country’s consumption rate by about 33 percent. Salako said on the sidelines of the 78th session of the UN General Assembly in New York, that the action has reduced the emission generated by petrol. “The singular action has reduced Nigeria’s consumption of petrol by 33 per cent, reduced the level of emission generated by Nigerians,” he said. “The courageous decision to remove subsidy from petroleum is furthering climate action by Nigeria. “I had highlighted this development in some of the meetings I attended or represented the President and at the meeting of Committee of African Heads of State and Government on Climate Change and at the meeting of Commonwealth Ministers of Environment and Climate. “Nigeria participated in the meeting of Committee of African Heads of State and Government on Climate Change where I represented President to pass a resolution to adopt the Nairobi Declaration for final vetting by the meeting of AU. “The first meeting of Commonwealth Ministers of Environment and Climate in which the Ministers decided to approach the 28th Conference of Parties in Dubai come late November to early December with common front of pushing for better financing for climate action. “I represented Nigeria at the meeting, and I established that President Bola Ahmed Tinubu by taking the courageous decision to remove subsidy from petroleum is furthering climate action by Nigeria. “It has also focused the attention of Nigeria at corporate and individual levels to renewable energy,’’ he said. Earlier in his statement delivered to the “High Level Event for Nature and People: from Ambition to Action”, on behalf of the President, Salako said achieving the world’s ambitious conservation targets, like 30×30, would require that we all do more to prioritise nature finance. 30×30 is a global target to protect 30 per cent of the planet for nature by 2030. “Last year, at COP15, the world agreed to fully close the nature finance gap and set a near term target of delivering at least $20 billion in international finance to the Global South by 2025. “Last month in Addis, African countries came together and issued a declaration that underscored the importance of these nature finance targets. “Nigeria would like to urge all countries to increase their efforts on this issue and to work with us to ensure that the world follow through on these crucial finance commitments. “This is our vision for the future, and we invite everyone to act and envision solutions that will preserve nature for future generations,’’ he said. According to him, as a responsible State Party to several Multilateral Environmental Agreements (MEAs), including the Convention on Biological Diversity, Nigeria is doing its utmost to promote transformation actions. The minister said that Nigeria was doing its best to promote transformations actions that are commensurate with the scale of the biodiversity crisis. “We are exerting these efforts within our own country in addition to supporting countries in our Sub-region to increase their capacity in this regard,’’ he said. In addition, Salako said that he attended Blue Leaders High Level Meeting, where in his statement, he said Nigeria was doing its best to promote transformation actions that were commensurate with the scale of the biodiversity crisis. He told the leaders that Nigeria was exerting these efforts within the country in addition to supporting countries in our Sub-region to increase their capacity in this regard. “This is an ambitious goal, a goal shared by the Blue Leaders and by ECOWAS countries, including Nigeria. “The high sea is an essential part of the marine ecosystem which plays critical role in maintaining the health of our planet and people. “Nigeria being the country with the longest coastline in West Africa understands the adverse effect of unregulated high sea and is therefore committed to the agenda of the ‘BBNJ’ Treaty. “Prompt ratification of the newly adopted high seas treaty is an essential means to reach this goal. We must urgently ensure that the treaty is ratified and implemented,’’ he said. He announced that through Nigeria’s rallying efforts, the 55 member States of the African Union have reached a consensus to support ratification of the earliest feasible date, the new international ocean treaty for the high seas, as enshrined in Addis Ababa Declaration. The declaration was adopted at the 19th ordinary session of the African Ministerial Conference on the Environment (AMCEN-19, August 2023). “Let us be bold for Oceans Conservation together and join African region to promptly ratify the new treaty,’’ he said.
‘European refiners groan as Nigeria’s subsidy removal bites harder’
Petrol subsidy removal by the Bola Tinubu administration is impacting European refiners negatively as demand for the product has reduced by more than 50 per cent, S&P Global Commodities at Sea has said. Imports of petrol to Nigeria plummeted to 106,000 barrels per day, b/d in July from 205,200 b/d in May, according to data from S&P Global Commodities at Sea, after local petrol prices skyrocketed. Total refined product demand has fallen 41 per cent in the same period, the data showed. Scrapping the long-standing subsidy could save Nigeria as much as Naira 11 trillion ($2.6 billion) in 2023, according to estimates from the World Bank in June, providing relief to a growing government deficit. Sinking Nigerian demand, driven by high fuel prices, has also led to a drop-off in demand for European exports, whose refiners had relied on thirsty West African markets. “There is zero demand [in West Africa] at the moment,” a source in the region said. Another European market source said: “Considering the [Nigerian] subsidy removal … demand is indeed depressed.” The 91 RON FOB AR WAF discount to FOB AR gasoline cargoes was $89/mt on August 10, down sharply from before the subsidy was taken away. On May 22, the spread was at a premium of $50.25/mt, but by the end of the month had fallen to a discount. The subsidy removal has shaken up longstanding arbitrage for European refiners. While Nigerian demand in particular has diminished, other destinations have picked up the slack. The US Atlantic Coast made up 28 per cent of total petrol exported from the Amsterdam-Rotterdam-Antwerp region in July amid persistently low stocks, according to Kpler shipping data, increasing its share from the low teens almost in tandem with the shrinking Nigerian demand. As a result, European refiners have been unfazed by sinking demand in West Africa. “The arb is strong. Octanes are tight, so petrol remains well supported” a trader in Europe said. European traders already faced being crowded out by Russian refined products that have flooded into Africa — including Nigeria — since the onset of the war in Ukraine saw European countries boycott Russian oil products. Yet even Russian exports to Nigeria have fallen sharply since the fuel subsidy was scrapped. Nigeria is Africa’s largest oil producer, with an output of 1.32 million b/d last month according to the Platts OPEC Survey from S&P Global, but a lack of refining capacity means the country is forced to import refined products. One potential solution is the long-awaited Dangote refinery inaugurated by former president Muhammadu Buhari in April. The mega project, built by Aliko Dangote, is designed to make Nigeria self-sufficient in fuels, soften the gasoline market, and even to supply countries across Africa and beyond. According to estimates from S&P Global, Nigerian gasoline production could overtake imports in 2025 and exceed them until the 2040s, if the refinery can get up and running.
Subsidy Protest: I share in your pains, Gov AbdulRazaq tells labour unions
Kwara State Governor, AbdulRahman AbdulRazaq has said the state government has rolled out several measures designed to ease the inconveniences of fuel subsidy removal for its workers and the general public. While addressing the labour unions who presented to him a protest letter over the subsidy removal, AbdulRazaq commended labour for its peaceful protest and aspirations as representatives of the Nigerian workers. The governor, who was represented by the Deputy Governor, Kayode Alabi, said the message from Nigeria Labour Congress (NLC) was loud and clear and would be delivered to President Bola Tinubu. “We acknowledge that this is a tough moment for everyone and we share in the temporary pains of our people,” the governor said. He added that his administration empathises with the people and workers and would do more in addition to the moves already made by the state government to ease their pains. AbdulRazaq explained that, as a palliative measure, grains were being purchased from the Federal Government and would soon be distributed to vulnerable households, including labour unions and affiliate organisations. The list of beneficiaries, he said, would be inclusive and the process would involve all key stakeholders in the community. The governor further confirmed the approval of the support for students and security agencies, which was built on what was earlier announced for all categories of workers in the state. He said free transportation had earlier been arranged for tertiary students in the state. “I call on the NLC to further support and work with government to implement key economic reforms for sustainable growth alongside specific palliatives until things stabilise,” the governor said. He urged NLC to bear with the government and continue to hold talks so that everyone involved could pull through the phase in a way which would sustainably benefit the country. “There may not be easy solutions, but Nigeria will come out of this stronger and better if everyone endures and works together,” AbdulRazaq added. The State Chairman of NLC, Comrade Muritala Olayinka, said workers were facing a lot of challenges due to the removal of fuel subsidies. He urged the state government to come quickly to the aid of the people in order to lessen the pains on the people and business concerns.
Fuel Subsidy: Senate urges NLC to shelve planned strike
The Nigerian Senate has appealed to the Nigeria Labour Congress (NLC) to shelve its impending strike on fuel subsidy removal and continue negotiation with the Federal Government. Senate resolution followed the consideration and adoption of a motion at plenary on Monday. The motion titled: ”Urgent Need to Avert the Intending Strike of the Nigeria Labour Congress”, was sponsored by Sen. Kawu Suleiman (NNPP-Kano). Suleiman in his lead debate said the NLC has given the Federal Government a seven-day ultimatum to reverse what the union termed as “anti-poor policies” or face an indefinite nationwide strike from August 2nd. He said the NLC had directed all its affiliates and state councils to immediately begin mobilisation of workers and other Nigerians, including civil society allies for a long-lasting strike and mass protests. Suleiman said the labour, in a statement signed by its National President, Joe Ajaero, alleged that the Federal Government had failed to meet up with the demands it presented to it following subsidy removal on petrol. Not meeting the demand as stated in the statement could cause an astronomical rise in price of the commodity. He expressed worry that the strike would cripple the country as commercial transport operators would withdraw their services, while markets, schools and healthcare facilities would be forced to shut down. According to him, the action could heat up the polity when it occurred, saying that gains from the strike were far below the costs to either of the parties in conflict. The senator said the strike threat by the NLC, if not averted, could plunge Nigeria into deeper economic woes, dislocate businesses, hunger, and frustration. Suleiman said more hardship would lead to unquantifiable financial losses and reduce Nigeria’s Gross Domestic Product (GDP). He said the NLC proposed strike was a bad reputation for Nigerian economy and the educational system, saying that it portrayed the country in a bad light to the external world According to him, it discourages foreigners from coming to do business or study in Nigeria. The senator said that the society always bears the brunt of strikes, adding that an idle mind was the devil’s workshop. He said there was a tendency for an increase in crime rate, social vices like armed robbery, oil bunkering, prostitution, cyber scams, among others, if the strike was allowed to hold. Following support of senators on the motion, Senate accordingly resolved to mandate its leadership to interface between the NLC and the Federal Government to avert the intending strike.
Tinubu to address Nigerians amid nationwide hardship
On Monday, July 31, 2023, President Bola Ahmed Tinubu will deliver a broadcast to the nation at 7 pm. The announcement was made on Monday morning by Dele Alake, the presidential spokesman, urging television, radio stations, and other electronic media outlets to tune in to the network services of the Nigerian Television Authority (NTA) and Radio Nigeria for the broadcast. Though the specific content of the address remains undisclosed, it comes at a time when the country is grappling with widespread hardship due to the removal of fuel subsidy, leading to an increase in petrol prices. President Tinubu has consistently appealed for calm, assuring the public that the government is diligently working to improve living conditions and alleviate the prevailing challenges. Interestingly, this address coincides with an upcoming nationwide protest by the organized labour, which is parleying civil society organisations as they prepare for an industrial action on August 2, and the ongoing strike by the Nigerian Association of Resident Doctors (NARD). The NARD has rejected the recent 25% increment in basic salary announced by the federal government, demanding the full restoration of the Consolidated Medical Salary Structure to its original value as approved in 2009. The association, represented by its president, Dr. Orji Emeka Innocent, secretary-general Dr. Chikezie Kelechi, and publicity and social secretary Dr. Umar Musa, vows to continue the nationwide total and indefinite strike action until the government takes significant steps to address their demands, including the release of the circular on the One-for-One policy for the replacement of exited clinical workers to ease work overload caused by brain drain. As Nigerians await President Tinubu’s address on Monday night, the nation is at a crucial juncture, grappling with pressing issues that demand immediate attention and resolution.
NNPCL, marketers, others involved in fuel subsidy scam –Yuguda
*Says Buhari can’t claim ignorance of the whole issue Former Bauchi State Governor, Isa Yuguda has said that the Nigerian National Petroleum Corporation Limited (NNPCL), petroleum markers and other are involved in the fuel subsidy scam the country has suffered in so many years. Yuguda, who blamed the lack of a political will on the part of former President Muhammadu Buhari’s, said Buhari had before becoming President in 2015 described subsidy as a scam yet he did nothing to end it. Yuguda, who said this on ChannelsTV on Monday in Abuja, insisted that the subsidy regime was a scam that was perpetuated by the Nigeria National Petroleum Company Limited (NNPCL) in collaboration with marketers and other stakeholders. He said: “I am sad to let Nigerians know what I saw; we came across situations where subsidy was claimed on pipelines that never existed. “We were subsidizing West Africa, we were bringing in this fuel at an elevated cost and then half of it was exported out by the same group that is supposed to supply this fuel in Nigeria. Are the security doing their jobs, are other security agencies that are supposed to sanction those that are taking our fuel out of Nigeria doing their jobs? “Secondly, when I chaired that committee on subsidy that uncovered the scam, I told you that subsidy was being paid on pipelines that never pumped products. In fact, forms were just filled and subsidies are paid, and to whom are they paid? – to the marketers. “Those that claim to pump the products and those that are in the subsidy scam, they just fill papers, invoices and they claim subsidy on it. They have no heart, these people, they are just heartless,” Yuguda said. Yuguda, who is the Chairman of the APC Forum, a professional think-tank, said that the subsidy racket “was a sophisticated gang up and those that should act are also part of it. President Buhari cannot claim ignorance of the whole issue,” he added. Recently, after a visit to President Bola Ahmed Tinubu, ex-militant leader, Asari Dokubo had said: “I also want to say that oil theft is encouraged by the military. The Army and the Navy intimidate the (Nigeria Security and) Civil Defence (Corps) who are by status the people who are supposed to guard these pipelines. They receive a lot of money from NNPCL and the IOCs and just across the corner, you will see a houseboat. “We have seen that situation. You have a situation that is completely different. The government thought they could run the economy through borrowing. This is the time as a matter of necessity. “If Mr President can have the will to go after all those government officials that were responsible for hemorrhaging the economy, 70-80 per cent of what they have taken out of Nigeria should be brought back into Nigeria. Would he continue printing money like the way that they’ve been doing through Ways and Means. “Government cannot continue to borrow from the CBN to fund activities, it’s not possible. There is a limit to which you can borrow,” he explained.