Distributional Effects of Nigeria’s 2025 Tax Act on the Composition of State Tax Revenues across Taxpayer Groups

This study examined the distributional effects of Nigeria’s 2025 Tax Act on the composition of state tax revenue, with a focus on the PAYE–Direct Assessment mix. Using a balanced panel of 37 jurisdictions from 2016 to 2027, outcomes were constructed from NBS State IGR reports and population data, with covariates on e-payment intensity (CBN POS per 1,000 residents), MSME density (SMEDAN–NBS), formal employment shares (NBS Labour Survey), and CAC registrations. Identification relies on a post-Act indicator (2026–2027). Methods combine two-way fixed effects with interactions, an event study, dynamic estimation (System GMM), a causal ML T-learner, and an isolation forest anomaly screen. Results show a post-Act rise in PAYE share (+ 3.9 points), no pre-trend, and stronger effects in states with higher employment and CAC registrations. The T-learner estimates an average treatment effect of ≈ 0.14, highlighting heterogeneity. Policy implications stress digital rails, formalisation, and AI-enabled monitoring.