Panic has erupted across Nigeria following reports that tax authorities may begin debiting personal bank accounts to recover unpaid taxes, sparking widespread concern among individuals and businesses.
The development followed a notice attributed to the Lagos Internal Revenue Service (LIRS), which cited provisions of the tax administration law empowering tax authorities to recover outstanding liabilities through direct bank debits.
According to the notice, the measure is intended as a last-resort enforcement tool after all legal and administrative processes have been exhausted.
While federal agencies have not formally denied the report, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, clarified that the power known as substitution is neither arbitrary nor discretionary.
He explained that it applies only to established and unpaid tax liabilities and is exercised strictly in line with due process, including the exhaustion of appeal channels.
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Despite the clarification, economists and financial experts have expressed concern over conflicting public statements surrounding the policy.
They warn that the lack of clear communication has already triggered fear in some quarters, with reports of individuals withdrawing funds from banks over concerns of possible arbitrary debits.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, cautioned that allowing tax authorities direct access to bank accounts without clear safeguards could undermine public confidence in the financial system.
He stressed that funds in personal accounts may not necessarily belong solely to the account holder, as they could include monies belonging to contractors, suppliers, or third parties.
Yusuf further warned that growing apprehension could drive Nigerians to keep cash outside the banking system or convert savings into foreign currencies, potentially weakening financial inclusion and financial stability.
He maintained that any extreme enforcement action should only be carried out with explicit court authorization.
Similarly, former President of the Chartered Institute of Bankers of Nigeria, Mazi Okechukwu Unegbu, described the move as dangerous, questioning its legal basis and warning that unchecked enforcement could damage the credibility of both the tax system and the banking sector.
Both experts urged authorities to manage the tax reform process carefully, emphasizing that while revenue generation is important, enforcement measures must be transparent, legally grounded, and sensitive to public trust.
The controversy adds to ongoing debates surrounding Nigeria’s new tax laws, which have continued to attract criticism and calls for greater clarity since their introduction.