Taxation in Nigeria: Four Reasons Kenyans Riot Over Taxes and Nigerians Do Not

Taxes are a big political deal in Kenya. In June 2024, violent protests over a controversial tax legislation rocked Kenya and almost brought down the President Ruto government. Government buildings were torched and public infrastructure vandalised; the young protesters stormed the parliament, leading to deaths. The government was forced to reshuffle the cabinet as a concession to calm political tension. The proposed tax law was meant to generate $2.7 billion to fund the budget deficit.

Nigerians had their own protests in August, tagged #EndBadGovernance. A distinct difference between the protests is that Kenyans were protesting an attempt by the government to increase revenue while the underlying current of the Nigerian protests were demands that would deplete government revenue  or more precisely increase debt i.e. through the maintenance of the fuel subsidy.

Here are four explanations of why Nigerians don’t start riots over changes to tax administration or tax hikes:

1. Oil Revenue: There is a key difference in the political economy of Kenya and Nigeria- the Kenyan state is largely funded by taxes paid by businesses and citizens while the Nigerian budget is funded by oil revenue. The Nigerian government does little to enforce tax regulations-oil exports account for 70% of Nigeria’s budget and 95% of the country’s foreign exchange revenue. Nigeria’s current tax-to-GDP ratio currently stands at just 10.86 percent, significantly below the Sub-Saharan African average of 18.6 percent. As of 2021, only 41 million Nigerians were enrolled by the FIRS, a very poor figure. This has meant only a few people in Nigeria pay direct taxes. Kenya’s tax-to-gdp ratio is 15.1 percent and the government intends to raise it to 25% by 20230.
2. Prevalence of Indirect taxes: The majority of taxes paid by most Nigerians are paid indirectly e.g  Value Added Tax (VAT) on goods. Because these taxes are attached to prices, people see them as part of the cost of living, rather than as taxes they pay to the government. This less visibility of indirect taxes means no outcry. Kenyans on the other hand have to pay more of direct taxes which they can’t hide from, hence their tendency to protest over taxes. Direct taxes in Kenya include property taxes and rental income taxes which are strictly enforced.
3. Weak Tax Enforcement: Nigeria has many direct taxes but collection is poorly enforced so Nigerians don’t feel the impact of these taxes in the same way citizens in countries with stronger tax enforcement do. The informal sector which accounts for about 77% of the country’s working population is made up of businesses that are typically unregistered and virtually impossible to tax.
4. Tax Invisibility: The lack of enforcement can lead to a sense of “tax invisibility” or indifference.  Kenyan citizens on the other hand are required to get a pin to be used for all their tax interactions. This pin is also required for a variety of activities and serves as a means of national identity for every Kenyan once they turn 18 as a result of this KRA pin, citizens have nowhere to hide from paying taxes, hence their eagerness to protest unfavourable tax policies.