A Theoretical Framework for Understanding the Political Economy of Tax Reform in Nigeria

Tax reform in Nigeria faces persistent political economy obstacles that standard public finance theory inadequately explains, and developing an original theoretical framework for understanding these obstacles provides an important contribution to the political economy of taxation in developing federations. This study developed an original Political Economy of Tax Reform Framework for Nigeria, drawing on political economy theory, fiscal sociology, and empirical research across multiple reform episodes. A constructive theoretical methodology was employed, combining systematic review of 76 political economy of taxation publications from 2018 to 2024, qualitative analysis of five major tax reform episodes (1992 VAT introduction, 2007 FIRS autonomy, 2011 petroleum profit tax, 2019 Finance Act, 2023 Finance Act), and structured interviews with 40 key informants including legislators, FIRS officials, business association representatives, and civil society tax advocates. Qualitative analysis identified three dominant political economy mechanisms constraining tax reform: elites blocking high-wealth taxation while accepting consumption taxes that burden lower-income populations, federal-state tax jurisdiction conflicts that create reform deadlock, and oil revenue complacency that reduces political urgency for tax effort improvement. The original framework proposes a three-level political economy analysis: electoral politics of tax incidence, intergovernmental power dynamics over tax authority, and elite capture of tax exemption provisions. Each level includes testable propositions and reform pathway implications. Expert review by 24 political economists confirmed the framework's original contribution. Recommendations include transparency reforms for tax exemptions and revenue collection at all government levels.

Keywords: political economy of taxation, tax reform, Nigeria, fiscal sociology, original framework