Tax Reforms: Workers Unimpressed by Dslight Pay Rise

The rollout of Nigeria’s revised Personal Income Tax (PIT) framework has delivered only limited gains for many workers, with several employees describing the resulting increase in take-home pay as barely noticeable amid persistent economic strain.

The tax reforms, recently implemented by the Federal Government, introduced exemptions and rate adjustments aimed at easing the burden on low- and middle-income earners. Workers earning the national minimum wage are now exempt from PIT, while individuals with gross annual earnings of up to N1.2m equivalent to about N800,000 in taxable income no longer pay personal income tax. The new laws also reduce PAYE deductions for those earning up to N20m annually and exclude gifts from taxable income.

However, feedback from workers across sectors suggests that the practical impact of these measures has fallen short of expectations. Several employees told The PUNCH that while their salaries increased slightly after the reforms, the difference was too small to meaningfully cushion rising living costs.

Adetunji Morgan, a banker, said his take-home pay increased by roughly N5,000. While acknowledging the adjustment, he noted that it offered limited relief in the face of inflation. Similarly, Lagos State civil servant Adedayo Lawal said he could not immediately assess the effect of the PAYE reduction, explaining that irregular allowances paid in December made it difficult to isolate the impact of the tax changes. He added that he did not anticipate a substantial improvement in his earnings.

Other workers echoed the sentiment. Tolulope Ifeanyi, employed in the financial services sector, described her salary increase as marginal, while media practitioner Joshua Austin dismissed the adjustment as largely symbolic, noting that the additional income was insufficient to cover even basic discretionary expenses.

Online reactions mirrored these experiences. A verified X user, Gabriel Bolatito, acknowledged a slight reduction in PAYE deductions but said the increase in take-home pay was modest and broadly in line with expectations. Uchechi Nwankamma, a contract staff member at Access Bank in Lagos earning between N200,000 and N250,000 monthly, said her salary rose slightly but stressed that the increase only marginally helped with escalating household expenses.

According to interviews conducted across both the public and private sectors, reported salary increases ranged widely from about N6,000 and N5,000 at the upper end to as little as N3,000, N1,443, and even N400 for some workers.

Responding to the mixed feedback, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said the committee had received confirmations from employees who experienced PAYE reductions under the new laws. He announced plans for an engagement session with HR directors, payroll managers, and senior finance executives to promote uniform understanding and proper implementation of the reforms.

Nonetheless, reactions to Oyedele’s statement online suggested uneven outcomes. Some workers reported increased deductions and lower take-home pay. Addressing this disparity, PwC Partner for Tax Reporting and Strategy, Kenneth Erikume, explained that the graduated tax structure means individuals earning below N25m annually are likely to benefit from reduced taxes, while higher earners may face increased obligations.

Development economist Dr Aliyu Ilias cautioned that the reforms, initially framed as progressive, may have unintended consequences. He pointed to additional levies on banking and digital transactions as factors that could erode disposable income, urging policymakers to closely monitor implementation and amend emerging distortions where necessary.