The Federal Government is reportedly set to roll out a controversial automatic tax deduction scheme, which would empower tax authorities to withdraw taxes directly from personal and corporate bank accounts.
According to early policy outlines under consideration, the system aims to track financial inflows, classify them under taxable categories, and apply deductions automatically, using a reporting framework built around banking compliance and digital oversight.
Officials promoting the policy argue that Nigeria must expand its narrow tax base to stabilize public finances, especially at a time when global economic shocks and domestic revenue shortfalls strain government spending capacity. They say the new mechanism will curb tax evasion, especially among high-income professionals and informal-sector players who under-report earnings.
But the policy has sparked a wave of concern. Financial analysts warn that automatic deductions without robust dispute-resolution pathways could lead to over-taxation, errors, or politically motivated targeting. Civil society groups argue that such power requires airtight legal safeguards, judicial oversight, audit trails, and transparency guarantees.
Economists also caution that withdrawing funds directly from accounts especially for small businesses could destabilize cash flow and undermine economic confidence if not implemented with sensitivity and clarity.
