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  Tax is compulsorily statute- based; hence, a tax cannot be validly imposed except by law and validly passed by the legislature. Therefore, the taxing power of government is the power of that government to impose taxes, usually by legislation duly enacted for that purpose.
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Taxing power means the power of a level of government to impose a tax by its own law and prescribe conditions for the collection and sue administration of the tax either by its own agency or that of another level of government. This must be distinguished from the power to merely collect taxes or levies which is executive or merely administrative in character.

Taxing Powers Of The Federal Government

Under the Exclusive Legislative List of the 1999 Constitution, only the following taxes are expressly reserved for the federal government: Stamp Duties and Taxation of incomes, Profit and Capital Gains. However, item 7 of the Concurrent Legislative List provides that: In the exercise of its powers to impose any tax or duty on-
  1. Capital gains, incomes, or profits of persons other than companies; and
  2. Documents or transactions by way of stamp duties,
The National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty, or the administration of the law imposing it shall be carried out by the government of a state or other authority of the State. Note that although it is said to be the concurrent list of legislative powers between the federal government and the state governments, the list is somewhat restrictive as it limits the extent to which each legislative authority can legislate on the matters it contains. In the context of taxation, while the National Assembly is given the ‘exclusive power’ to impose tax or duty on capital gains, incomes, or profits of persons other than companies and documents or transactions by way of stamp duties, the government of a state has ‘concurrent ‘ legislative power, with regard to these items, that is limited to tax collection. Therefore, the taxing powers of the federal government include but not limited to those mentioned in the Exclusive Legislative List, but this should not be interpreted as making all powers of taxation exclusive to the Federal government. Taxation powers not listed in the constitution can be exercised by the other arms of government.

Taxing Powers Of The State Government

No tax base is specifically reserved for the state under the constitution. The question that therefore arises is whether the state has no taxing power whatsoever, or whether it has the power to impose taxes on matters over which it has the power to generally legislate. In addition to the Federal Government under the constitution, state government, as noted above, are granted tax collection and administration powers under item 7 of the concurrent legislative list. However, although the constitution only grants tax collection powers to the State governments, this does not mean that the State Governments cannot impose taxes. On the contrary, state and local government authorities are empowered to impose taxes in relation to matters not expressly conferred on the Federal Government by the constitution. The Taxes and Levies (Approved List for Collection) Act was enacted as a decree in 1998 to provide for the tax collection powers of the different arms of government. Part 1 of the Schedule to the Act provides for the Federal Government as follows:
  1. Companies Income Act;
  2. Withholding tax on companies, residents of the Federal Capital Territory, Abuja and non-resident individuals;
  3. Petroleum profits tax;
  4. Value added tax;
  5. Education tax;
  6. Capital gain tax on residents of the Federal Capital Territory, Abuja, bodies corporate and non-resident individuals;
  7. Stamp duties on bodies corporate and residents of the FCT; Abuja.
  8. Personal income tax in respect of a) members of the armed forces; b) members of the Nigeria Police Force; c) residents of the FCT; d) staff of the ministry of foreign affairs and non-resident individuals.

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Part II of the Schedule to the Act provides that tier will be entitled to collect taxes in relation to:
  1. Personal income tax in respect of a) Pay-As-You-Earn (PAYE) and; b) Direct taxation (self-assessment);
  2. Withholding tax (individuals only);
  3. Capital gain tax (individuals only);
  4. Stamp duties on instrument executed by individuals;
  5. Pools betting and lotteries, gaming and casino taxes;
  6. Road taxes;
  7. Business premises registration fee in respect of:
a) urban areas as defined by each state, maximum of: i) N10,000 for registration; and ii)N5,000 per annum for renewal of registration; and b) rural areas- i) N2,000 for registration; and ii) N1,000 per annum for renewal of registration;
  1. Development levy? (individuals only) not more than N100 per annum on all taxable individual
  2. Naming of a street registration fee in the state capital
  3. Right of occupancy fees on lands owned by the State Government in urban areas of the state;
  4. Market taxes and levies where state finance is available.
Part III of the schedule to the Act lists the following items as eligible for tax collection by the local government:
  1. Shops and kiosks rate;
  2. Tenement rates;
  3. On and off liquor licence fees;
  4. Slaughter slab fees;
  5. Marriage, birth and death registration fees;
  6. Naming of a street registration fee, excluding any street in the state capital;
  7. Right of occupancy fees on lands in a rural area, excluding those collectable by the Federal and State Governments;
  8. Market taxes and levies excluding any market where state finance is involved;
  9. Motor park levies;
  10. Domestic animal fees;
  11. Bicycle, trunk, canoe, wheelbarrow and cart fees, other than a mechanically propelled truck;
  12. Cattle tax payable by farmers only;
  13. Merriment and road closure levy;
  14. Radio and television licence fees (other than radio and television transmitter);
  15. Vehicle radio licence fees (to be imposed by the local government of the state in which the car is registered);
  16. Wrong parking charges;
  17. Public conveniences, sewage and refuse disposal fees;
  18. Customary burial ground permit fees;
  19. Religious places establishment permit fees;
  20. Signboard and advertisement permit fees.


In Nigeria, taxes are imposed by statute in order for them to be legal. The constitution confers direct taxing powers on the federal government and tax collection powers on the state government, but the different arms of government may impose and collect taxes not covered under the constitution, as long as they provide laws to that effect. Featured Image Source: Banwo and Ighodalo
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This article was first published on 8th May 2021


Foluke Akinmoladun is the Managing Solicitor of Trizon Law Chambers. She has been a legal practitioner for 13 years and has experience in a wide range of commercial matters. She is a certified mediator, a member of the Chartered Institute of Arbitrators(UK), holds an Advanced Diploma in Accounting from the Association of Chartered Certified Accountants (UK) and is also a tax consultant. She is a dispute resolution expert, handling commercial disputes from negotiations all the way to litigation (if need be).

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