Fuel Tax Deferred Until Naira Gains Strength, Oil Prices Fall

Taiwo Oyedele.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has said that the proposed 5% fuel surcharge (tax) will not be enforced until there is a major improvement in economic indicators, particularly a stronger naira or a decline in international crude oil prices.

Speaking at the Haulage and Logistics Magazine Conference & Exhibition in Lagos yesterday, he explained that although the policy was designed to provide funding for road maintenance, implementing it now would increase the financial burden on Nigerians.

He stated that the surcharge, which was first introduced under former President Olusegun Obasanjo’s administration, was intended to allocate part of fuel revenues for road rehabilitation — with 40% directed to federal roads and 60% to state and local government roads.

“The idea is brilliant and already being implemented in more than 150 countries,” Oyedele said, noting that a large portion of Nigeria’s 200,000 kilometres of roads remains in poor condition.

He clarified that even though the Federal Roads Maintenance Agency (FERMA) had requested approval to begin collecting the levy after fuel subsidy removal, the committee turned down the proposal.

“We said no – introducing such a tax now would be insensitive,” he stated.

Oyedele explained that the surcharge had been included in the draft tax law but with strict provisions ensuring that it could only be activated by an official order from the Minister of Finance.

“For me, the right time will be when the naira strengthens or crude prices drop, so the surcharge won’t raise pump prices,” he said.

He further assured that the ongoing tax reforms would ease the challenges faced by the haulage and logistics sector by eliminating multiple taxation, reducing operating costs, and enhancing efficiency.

“We are not introducing new taxes; we are removing the many duplicated ones that frustrate transporters and increase prices,” he said.

According to him, under the new policy, small-scale transport and logistics companies with an annual turnover of less than N100 million will be exempted from company income tax, while eligible businesses will also have access to VAT refunds and tax incentives.

Oyedele added that the tax reforms aim to streamline Nigeria’s complicated tax system and ensure that all revenues are collected transparently and fairly distributed among all levels of government.