FG Rules Out Immediate Enforcement Of 5% Fuel Tax
The Federal Government on Tuesday ruled out an immediate enforcement of the 5% tax on petroleum products.
The Trade Union Congress of Nigeria (TUC) on Monday threatened a nationwide strike if the Federal Government implements the proposed 5% tax on petroleum products. The government intends the tax to fund infrastructure development, while the union and the opposition criticise its timing amid high inflation and recent fuel subsidy cut.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Tuesday, said the Federal Government has “no immediate plans” to implement the controversial 5% fuel surcharge contained in the newly signed Tax Administration Act 2025.
Speaking at a press conference in Abuja, Edun described the surcharge as a long-standing provision first introduced in 2007 under the Federal Road Maintenance Agency (FERMA) Act, and not a new tax measure created by the Tinubu administration.
According to him, the surcharge’s inclusion in the 2025 Act is part of efforts to consolidate and harmonise existing laws for clarity and ease of compliance.
“It is important to make this distinction. The inclusion of the surcharge in the 2025 Nigeria Tax Administration Act does not mean an automatic introduction of new tax. It doesn’t mean fresh taxation automatically,” Edun said.
The fuel surcharge was originally designed to fund road maintenance, with 40% of proceeds allocated to FERMA and 60% to state-level equivalents.
However, the recent mention of the levy in the consolidated Tax Administration Act raised fears that Nigerians would face an additional burden on fuel costs starting in 2026.
Edun clarified that the new law will not take effect until January 1, 2026, and even then, any implementation of the surcharge would require a formal commencement order by the minister of finance, published in an official gazette.
“There is a whole formal process involved, and as of today, no order has been issued, none is being prepared and there is no plan. There is no immediate plan to implement any surcharge,” he stressed.
The minister used the opportunity to justify government’s broader tax reform effort, noting it as a long-overdue overhaul of Nigeria’s fragmented tax system.
He said the Tax Administration Act is one of four legislative instruments passed to improve transparency, simplify compliance for individuals and businesses, and modernise revenue collection.
The other laws include the Revenue Service Bill, the Joint Revenue Board Bill, and the overarching Tax Reform Bill.
“This is a transformational legal document,” Edun said, describing the process of preparing the reforms as “deliberate, evidence-driven and phased,” following years of consultation, technical work and collaboration.
He noted that moving from legislation to implementation would also involve significant preparation, including institutional realignment, capacity building, and public sensitisation.
Amid heightened public scrutiny and economic pressure on households, Edun emphasised that President Tinubu’s administration remains committed to macroeconomic stability and private-sector-led growth.
The goal of the tax reforms, he stressed, is not to impose new burdens on Nigerians, but to create a more transparent and effective tax system that curbs leakages, boosts efficiency, and fosters investor confidence.
“This government is fully aware of the economic pressures of the time and will not take decisions that will make things even more burdensome,” Edun stated.
“Our priority is to strengthen tax governance, block revenue leakages, and improve efficiency rather than just levy new taxes, charges, and costs.”
The minister said ongoing macroeconomic reforms have already begun to yield results, pointing to improving investor sentiment and recent affirmations from development partners and international rating agencies.
He, however, acknowledged the need for careful communication and implementation of the new tax framework in the months ahead.
“There needs to be and there will be publicity, sensitisation, education and information.
“As you know, with all policies, once the policy is passed into law, the next step is implementation — robust, careful and effective implementation, timing and sequencing of the various activities,” he said.
Meanwhile, Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has refuted reports that the implementation of the Federal Government’s proposed 5% tax on petroleum products, will commence on January 1, 2026.
Speaking on Tuesday when he featured on Channels Television’s ‘The Morning Brief’, Oyedele faulted TUC over its threat, arguing that the surcharge was introduced in 2007 and not the administration of President Bola Tinubu.
Noting that “the decision was made to put this in the new law and to put a commencement date that is going to be in the future, based on an order to be gazetted by the minister. TUC, which is planning to go on strike to say it should be removed. I don’t know what they want the government to remove, because it hasn’t been imposed, and there is no regulation that says it would be imposed from January. The TUC should have complained and protested when this was introduced in 2007.”
He stressed that “nobody will just spontaneously introduce the tax and create problems for the system.”
Oyedele emphasised that shortly after President Bola Tinubu signed the tax bills into law on June 26, there was already an attempt by FERMA to collect 5% petrol tax but were stopped.
“We had to say to them, ‘You can’t collect it because the new law says you’re not the one to collect and commencement will not happen till the minister says so.’ There is nothing that says this tax will start 1st January 2026. People need to get that right”, he stressed.
While seeking support for the proposed petrol tax, Oyedele, who disclosed that Nigeria has about 200,000 kilometres of roads with only 60,000 paved, making logistics costly, unsafe, and inefficient, said the surcharge will help the government with funds to maintain the roads.
COURTESY: Independent
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