Taxation and the trust gap

Nigerians may be more willing to pay for public services than is sometimes assumed. An Afrobarometer survey released this month found that 64 per cent of Nigerians support universal access to healthcare even if it means paying higher taxes.

There is another figure worth putting beside it. In an earlier Afrobarometer survey, only 34 per cent of Nigerians believed government usually used tax revenues for the well-being of citizens. A majority also said it was difficult to find information about the taxes they were expected to pay and how government used the money collected.

The two findings were recorded several years apart and measure different things, but together they raise an interesting question about Nigeria’s tax system. People may accept the principle of paying taxes while remaining doubtful about what happens after the money leaves their hands.

Anyone running a business in Nigeria will recognise some of the frustration. Taxes and levies are collected by different levels of government, yet businesses still provide many things for themselves. Households pay for generators or alternative electricity, private water, security, healthcare and often private schools. For many citizens, paying tax can therefore feel like paying government after already paying privately for services they expected government to provide.

That experience can shape what researchers call “tax morale”, this is the willingness of people to pay what they owe without being forced.

Across Africa, the relationship between trust and tax compliance is well documented. The OECD, African Union Commission and African Tax Administration Forum concluded in their 2024 study of African tax systems that trust in government, perceptions of fairness and satisfaction with public services influence voluntary compliance.

Concerns about corruption and poor use of public money can weaken that willingness.
Afrobarometer found a similar pattern across 34 African countries. Only 41 per cent said they trusted their tax office somewhat or a lot, while 77 per cent said it was difficult to find out how governments used tax revenues. More than half believed people in their countries often or always avoided paying taxes.

There is another issue of fairness. People are less likely to respect a system when they believe others can escape it. In the same African surveys, 56 per cent thought wealthy people were very likely to use bribes to avoid taxes.

Nigeria has made considerable progress in expanding its tax base and modernising collection. But technology can make collection easier without resolving the relationship between taxpayer and government.

Greater transparency over how revenue is spent can help. So can simpler tax rules, clearer information about what people owe, visible enforcement across income groups and public services that citizens can connect to the taxes they pay.

There is already evidence that Nigerians will accept greater taxation when they believe the purpose is worthwhile. The recent finding on healthcare is important for precisely that reason.

A sustainable tax system therefore depends partly on what happens after collection. Citizens who regularly see where their money goes have a different relationship with taxation from citizens who experience government mainly when payment is demanded.

Nigeria’s tax challenge is consequently also about trust – trust that the rules are fair, that others are paying too, and that what is collected will eventually return to citizens in ways they can recognise.

David Masagbor, Ph.D is a policy researcher with interests in economic, development, education and health policy.