The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the informal sector. The policy requires all bu\sinesses with annual turnover above ₦5 million to register and pay taxes. However, the policy has been met with resis ance from some bu\siness owners who argue that it will increase their \costs and reduce their competitiveness. What is the likely impact of this policy on the informal sector?

Question

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the informal sector. The policy requires all bu\sinesses with annual turnover above ₦5 million to register and pay taxes. However, the policy has been met with resis	ance from some bu\siness owners who argue that it will increase their \costs and reduce their competitiveness. What is the likely impact of this policy on the informal sector?

Accepted Answer

The policy will lead to a shift of bu\sinesses from the informal to the formal sector.

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