A wave of anxiety has swept across Lagos and beyond following revelations that the Lagos State Internal Revenue Service (LIRS) may, under certain circumstances, debit personal bank accounts to recover unpaid taxes. The disclosure has reignited national debate over Nigeria’s evolving tax framework, the limits of state power, and the fragile trust between citizens, financial institutions, and revenue authorities.
At the centre of the growing controversy is a notice issued by LIRS, which surfaced over the weekend and quickly circulated across traditional and social media platforms. In the notice, the agency cited provisions of the Nigeria Tax Administration Act, specifically Section 60, asserting that it possesses statutory authority to recover outstanding tax liabilities through a mechanism known as direct bank debit. For many Nigerians already grappling with economic hardship, inflationary pressures and policy uncertainty, the announcement landed like a thunderbolt.
DDM NEWS gathered that the notice immediately triggered panic in some quarters, with fears that tax authorities could begin to access personal bank accounts without warning. Although neither the Nigeria Revenue Service nor the Presidential Fiscal Policy and Tax Reforms Committee formally denied the report, their silence only deepened public unease.
Attempting to calm the growing storm, the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, issued a clarification via his official X (formerly Twitter) account. Oyedele explained that what LIRS referred to as “substitution” is a recognised tax recovery mechanism, not an arbitrary power to seize funds at will.
According to him, the power of substitution allows a tax authority to direct a third party, typically a bank, to remit funds belonging to a defaulting taxpayer, but only to settle a final, established and unpaid tax liability. Crucially, Oyedele stressed that this mechanism is considered a last resort and can only be invoked after all legal and administrative remedies, including appeals to the courts, have been fully exhausted.
“This power is neither arbitrary nor discretionary,” Oyedele stated, adding that its application is strictly governed by due process and existing legal safeguards.
However, DDM NEWS notes that this clarification appeared to contradict an earlier position attributed to Oyedele himself, in which he reportedly stated that the new tax laws did not empower any level of government—federal, state or local—to debit personal bank accounts. The apparent inconsistency has only fuelled public confusion and heightened calls for clearer communication from authorities spearheading Nigeria’s tax reforms.
As the debate intensified, economists and financial experts weighed in, warning that poor messaging and perceived overreach could undermine the very objectives the reforms are meant to achieve. Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, described the situation as troubling, insisting that conflicting signals from policymakers must be urgently reconciled.
While acknowledging that tax reforms are necessary to broaden the revenue base and strengthen public finances, Yusuf cautioned that the idea of tax authorities directly accessing bank accounts touches a sensitive nerve in a country where trust in institutions remains fragile. He noted that the fear generated by the reports had already led to unintended consequences, including claims that some individuals were withdrawing funds from their bank accounts to avoid potential debits.
According to Yusuf, such reactions underscore the dangers of inadequate public engagement. He warned that anxiety over account debits could push Nigerians toward keeping cash at home or converting their savings into foreign currencies, developments that would weaken confidence in the banking system and roll back years of progress in financial inclusion.
DDM NEWS reports that Yusuf also raised deeper legal and ethical concerns about the nature of funds held in personal bank accounts. He argued that money in an individual’s account does not automatically belong to that person in absolute terms. It could include funds held in trust, payments from clients, suppliers’ money, or project-related advances.
“If a tax authority assumes that every naira in an account is the taxpayer’s asset, that is problematic,” Yusuf warned. “A contractor may be holding funds meant for suppliers. A businessperson may be holding money on behalf of a third party. Debiting such accounts raises serious questions about fairness and ownership.”
He further emphasized that enforcement actions of this magnitude should only occur with explicit judicial oversight. From his understanding, Yusuf said, any attempt to debit a bank account over tax liabilities should be backed by a clear court order authorising such action. In his view, the courts must serve as a neutral arbiter to balance the government’s revenue interests against citizens’ rights.
Echoing similar concerns, former president of the Chartered Institute of Bankers of Nigeria, Mazi Okechukwu Unegbu, described the reported move as dangerous and potentially destabilising. Unegbu questioned the legal basis for what he termed “arbitrary debits,” arguing that existing laws do not grant government agencies unfettered access to personal bank accounts without strict adherence to due process.
He warned that if such practices are perceived as routine or unchecked, they could erode confidence in both the tax system and the broader financial sector. “We are creating a monster here,” Unegbu said bluntly, urging authorities to tread carefully and ensure that enforcement mechanisms do not become instruments of fear.
DDM NEWS observes that the controversy comes at a delicate time for Nigeria’s tax reform agenda. The federal government has repeatedly emphasized the need to expand the tax net, reduce reliance on borrowing, and improve revenue collection efficiency. However, experts argue that reforms anchored on fear rather than trust risk backfiring.
Critics note that the new tax laws have already been dogged by controversies, including allegations that the gazetted versions of some provisions were altered. Against this backdrop, any suggestion of direct access to personal bank accounts, even if legally constrained, is bound to provoke strong reactions.
As of the time of filing this report, LIRS has not issued a comprehensive public statement addressing the concerns raised by economists, bankers and ordinary citizens. For many Nigerians, the silence has left critical questions unanswered: Under what exact conditions can substitution occur? How will innocent third-party funds be protected? What role will the courts play in authorising such actions?
For now, what is clear is that fear and uncertainty have entered the conversation around tax compliance. As DDM NEWS gathered, stakeholders across the financial and economic spectrum agree on one point: without clarity, consistency and transparency, even well-intentioned reforms risk alienating the very people they are meant to serve.
In a country striving to deepen financial inclusion and rebuild trust in public institutions, the handling of this issue may well determine whether tax reform is seen as a collective civic responsibility or as another source of institutional overreach.
