In a critical intervention, a leading economist has warned that the successful implementation of Nigeria’s new tax regime hinges not just on policy design, but on a massive, transparent public enlightenment campaign to prevent unintended economic shocks and potential instability in the banking sector.
Taxation & Economic Policy
By Chimezie Anaso
Awka, Jan. 8, 2026 – Prof. Chris Kalu, a Financial Economics Expert and lecturer at Nnamdi Azikiwe University, Awka, has issued a stark call to the Federal Government. In an exclusive interview with the News Agency of Nigeria (NAN), Prof. Kalu emphasized that immediate and comprehensive public education on the newly enacted, bank-based tax policy is not merely advisable but essential to “forestall adverse economic effects.”
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The core of Prof. Kalu’s argument centers on trust and clarity. He explains that the policy’s bank-based mechanism—where financial institutions act as collection agents—creates a unique vulnerability. Without clear, widespread communication, bank customers may misinterpret the deductions as a threat to their deposits’ safety or as arbitrary fees imposed by banks.
“The new tax policy took effect on Jan. 1 but up till now, not many people know what is being taxed, how they are taxed, and what they are supposed to pay,” Kalu stated, highlighting a dangerous information vacuum. This lack of clarity is compounded by reported “arguments about which tax law is being implemented,” creating confusion over fundamental details like tax brackets and rates.
The Specter of a Bank Run: A Real Risk
Kalu’s warning extends beyond mere confusion to a tangible systemic risk: the potential for a bank run. He explicitly notes that unaddressed uncertainties “could be subject to abuse by the banks and trigger apathy or bank-run.”
A bank run occurs when a large number of customers, fearing an institution’s insolvency, simultaneously withdraw their deposits. As withdrawals increase, the bank’s liquidity falls, potentially leading to default, which in turn fuels more panic and withdrawals—a vicious cycle that can cripple individual banks and threaten broader financial stability. In the context of a new tax, if citizens believe their deposits are being unfairly or opaquely taxed by the banks themselves, it could spark precisely this kind of destabilizing behavior.
Beyond Collection: The Social Contract of Taxation
Prof. Kalu frames the issue within the larger social contract of taxation. “Taxes are civic responsibilities which must be matched with quality delivery of social services on the part of the government,” he asserted. This highlights a critical, often overlooked component of tax compliance: citizen buy-in. Public enlightenment must therefore do more than explain mechanics; it must articulate the policy’s purpose and intended benefits for public goods and services. A populace that understands the “why” behind a tax is more likely to accept the “how.”
A Call for Coordinated Government Action
To bridge this communication chasm, Kalu urges a full mobilization of the state’s informational apparatus. “Government needs to deploy all its tools including the Ministry of Information and Communication, the National Orientation Agency and the media,” he stressed. This campaign must be multi-channel, consistent, and designed to preempt misinformation and fear.
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In conclusion, Prof. Kalu reminds policymakers that “fiscal policies are crucial to any economy and have the potential of sending unanticipated shocks, if not well managed.” The success of this new tax regime now depends as much on effective public communication and trust-building as it does on sound economic theory. The government’s next move—to enlighten or to remain silent—could determine whether the policy is a step toward fiscal consolidation or a trigger for avoidable economic disruption.
(NAN) www.nannews.ng
Edited by Christiana Fadare
