The Federal Government has said that the 5% surcharge on fuel mentioned in the new tax law is not a new tax introduced by President Bola Tinubu’s administration.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, made this known in a tweet on Saturday.
Oyedele said in a statement on Friday that the fuel charge has existed since 2007 under the Federal Roads Maintenance Agency (FERMA) Act.
He explained that it was only added to the new Nigeria Tax Act for clarity and transparency, not to begin right away.
Oyedele stated; “This note seeks to clarify matters arising regarding the 5% fuel surcharge in the new tax laws. The charge is not a new tax introduced by the current administration.
“The provision already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007. Its restatement in the new Tax Act is for harmonisation and transparency rather than immediate implementation.
“No. The surcharge is not new. It already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act). The new Tax Act only restates it for harmonisation and transparency. Hence, it was not part of the original tax reform bills submitted by the president to the National Assembly.”
Some Nigerians have raised concerns that the surcharge will make life harder and increase prices but Oyedele said the money from the charge will be used to fix and maintain roads, which will help reduce travel time, make roads safer, and lower vehicle repair and transport costs.
“The surcharge is designed as a dedicated fund for road infrastructure and maintenance. If implemented effectively, it will provide safer travel conditions, reduce travel time and cost, lower logistics costs and vehicle maintenance expenses, which will benefit the wider economy.
“This practice is virtually universal with over 150 countries imposing various charges ranging between 20% to 80% of fuel products to guarantee regular investment in road infrastructure.”
He also said the surcharge would not apply to all fuel types as products like kerosene, cooking gas (LPG), and compressed natural gas (CNG) will be exempt, along with clean energy sources, to support Nigeria’s move toward greener energy.
” No. Several energy products used by households are exempt. This includes household kerosene, cooking gas (LPG), and compressed natural gas (CNG). Clean and renewable energy products are also excluded to align with Nigeria’s energy transition agenda.”
When asked why the government could not just remove the charge, Oyedele explained that even though money saved from fuel subsidy removal helps, it is not enough to fix all Nigeria’s roads.
“While subsidy savings will provide some funding, they are insufficient to meet Nigeria’s huge and recurring road infrastructure needs among other public finance needs. A dedicated fund ensures reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.”
He added that this tax does not go against the government’s promise to reduce taxes, noting that several taxes have already been removed or paused like VAT on fuel, telecom taxes, and the cybersecurity levy to reduce pressure on citizens and small businesses.
“Not at all. The reforms have already reduced multiple taxes and removed or suspended several charges that directly affect households and small businesses, such as VAT on fuel, excise tax on telecoms, and the cybersecurity levy. By harmonising earmarked taxes, government is reducing duplication and ensuring a more efficient tax system.”
Oyedele said moving the surcharge from the old FERMA law into the new tax law helps create a better legal system
that can support future needs.
“Yes, the surcharge has been removed from the FERMA Act and incorporated into the new tax laws which are designed to provide a forward-looking legal framework for Nigeria.
“Keeping this provision in place within a harmonised legal framework ensures Nigeria is prepared to address critical challenges, such as sustainable road financing and even climate change impacts. It is not about immediate implementation, but to ensure the law provides a clear and effective framework for when it becomes necessary in the future.”
