As debates intensify over Nigeria’s newly introduced Tax Act of 2025, supply chain expert Arogundade Oluwasegun, MCIPS, CIPSMN-Chartered, has cautioned that the reform could trigger unintended price shocks if implemented without operational sequencing.

Speaking on the implications of the policy, Arogundade described the legislation not merely as a fiscal adjustment but as a nationwide supply chain stress test capable of influencing inflation, consumer behaviour and market stability.

“The New Tax Act is being discussed largely as a revenue tool, but in the real economy, it will function as a supply chain intervention,” he said. “If we treat it only as a legal event rather than an operational change, we risk converting a technical reform into a price shock.”

According to him, taxes do not automatically increase inflation, but the real pressure emerges through cost pass-through across Nigeria’s fragile logistics and production ecosystem. With the economy heavily dependent on imported inputs, inefficient ports, volatile haulage costs and unstable power supply, any additional levy often cascades through landed costs and eventually reaches consumers.

“In Nigeria, small upstream changes such as VAT timing or port charges can create large downstream distortions,” Arogundade explained. “That bullwhip effect shows up in retail pricing, pack sizes, and even promotional calendars.”

He noted that Nigerian households are already under severe purchasing pressure, making demand highly elastic. Even minor price increases, he said, push consumers toward smaller packs, delayed purchases or informal alternatives a trend that ultimately weakens the formal tax base.

“When demand becomes unstable, revenue becomes unstable,” he stated. “Demand stability is fiscal stability.”

Outlining what he described as a “supply chain–literate rollout,” Arogundade urged government authorities to first address structural cost leakages before layering new taxes.

“Ports, transport corridors and clearance processes magnify cost pass-through,” he said. “If logistics waste is not compressed, taxes will simply ride on already inflated costs and land directly in the CPI.”

He also stressed the importance of protecting business cash flow, warning that delayed VAT credits and unpredictable remittance schedules often force companies into precautionary price increases.

“The fastest way to trigger inflation is to make businesses finance the tax system,” he noted. “Timely VAT refunds and predictable remittance calendars reduce working capital strain and discourage defensive pricing.”

The supply chain specialist further advised that demand-sensitive categories such as staple foods and essential household items should be treated with caution, particularly during peak consumption periods.

“Any reform touching high-CPI goods must come after upstream efficiencies are achieved and outside sensitive seasons like harvest transitions or festive months,” he said.

On enforcement, Arogundade advocated the use of phased digital tools such as e-invoicing, describing them as instruments for price stability rather than punishment.

“When compliance is even-handed and digital, formal businesses are not undercut by non-compliant players,” he explained. “That keeps demand within the taxed economy.”

He also urged policymakers to communicate reforms with operational clarity rather than audit language, stressing that uncertainty itself fuels inflation.

“Predictability suppresses insurance pricing,” he said. “Businesses price uncertainty into goods when timelines and guardrails are unclear.”

Arogundade concluded by calling for a public performance dashboard tracking inflation trends, port dwell times, haulage indices and VAT refund timelines, adding that policy execution should be tied to measurable supply chain outcomes.

“Nigeria can modernise its tax system without worsening the cost of living,” he said. “But it must be implemented like a supply chain programme one that keeps goods moving, prices predictable and consumer confidence intact.”