In September 2024, optimism surged when Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, announced plans to eliminate Value Added Tax (VAT) on public transportation. The news was widely welcomed—not only by everyday commuters, but also by advocates of tax justice and economic equity. The proposed VAT exemptions were expansive, covering not just transport but also essential items such as unprocessed and semi-processed foods, bread, rent, education, and healthcare.
However, for Nigeria’s road transport workers, the financial burden may simply take a different shape.
For years, the National Union of Road Transport Workers (NURTW)—commonly known as “the union”—has operated with considerable autonomy, imposing a variety of levies on drivers. Depending on the route and location, these charges can range from as little as ₦100 to as much as ₦3,000—or in extreme cases, even ₦20,000 per day. Informally referred to as “union tax,” these fees are often passed on to passengers, thereby undermining the very affordability that the VAT exemption seeks to promote.
This creates a troubling cycle: passengers continue to pay inflated fares, while commercial drivers see their daily earnings eroded.
Speaking at the BusinessDay Tax Reforms Conference on April 22, 2025, Taiwo Oyedele acknowledged the issue head-on. “We are also mindful of these informal taxes by state actors,” he said. “That process is still ongoing. It’s not something one level of government can resolve alone. We are engaging local governments, state governments, and the federal government as well.”
His remarks underscore a crucial challenge: despite the progressive nature of the tax reform bill, it remains unlikely to dismantle the entrenched system of informal levies imposed by transport unions and local authorities.
Oyedele also emphasized the need to rethink how taxation affects low-income earners and small-scale operators. He envisioned a more intelligent, accountable tax system—one that targets actual profits rather than mere visibility or activity.
Using a relatable example, he posed a question: “Let’s say I run a logistics business with motorbikes—why are the bikes being stopped on the road and taxed? This is a business. Let me make my deliveries, calculate my profits, and then pay income tax accordingly.” His argument highlights a deeper flaw in current practices: taxing activity without considering actual income or profitability.
This concern is shared by many in Nigeria’s informal economy, where visibility often attracts taxation more readily than verifiable earnings. In the public transport sector, this means those who are most visible—drivers, riders, and vendors—are often the most heavily taxed, regardless of their actual income levels.
As Nigeria pushes forward with its tax reform agenda, the true measure of success will lie not in policy announcements, but in execution. While VAT exemptions on essential goods and services offer some immediate relief, dismantling the entrenched system of informal levies—particularly those enforced by powerful unions like the NURTW—will require consistent political commitment and deeper institutional reform.
Until such change is realized, both commuters and drivers may continue to shoulder the weight of a system that, despite reforms, remains largely unchanged.
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