Presidency Clarifies 5% Fuel Surcharge, Insists It’s Not a New Tax

The Presidency has clarified that the 5% fuel surcharge referenced in Nigeria’s new tax laws is not a fresh levy imposed by President Bola Tinubu’s administration.

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, explained in a statement on Friday that the charge has existed since 2007 under the Federal Roads Maintenance Agency (FERMA) Act. He stressed that its inclusion in the new tax framework is for transparency and harmonisation, not immediate enforcement.

“This is not a new tax,” Oyedele noted. “The provision already exists under the FERMA (Amendment) Act of 2007. Its restatement in the new Tax Act is to provide clarity. It was not part of the reform bills submitted by the president.”

Concerns have trailed the provision, with many Nigerians fearing it could worsen the cost of living. But Oyedele assured that the funds are earmarked for road repairs and maintenance, an investment he said would ease transportation challenges, reduce vehicle repair expenses, and enhance economic productivity.

He pointed out that more than 150 countries apply fuel-related surcharges ranging between 20% and 80% to fund road infrastructure, noting Nigeria’s proposed 5% is comparatively modest.

To further ease concerns, Oyedele said the charge would not apply to essential household fuels such as kerosene, cooking gas (LPG), compressed natural gas (CNG), or renewable energy products, aligning with Nigeria’s clean energy and transition agenda.

On why the charge could not simply be scrapped, Oyedele argued that savings from fuel subsidy removal are inadequate to finance the country’s massive road infrastructure deficit. He stressed that a dedicated fund ensures predictable financing for roads without overburdening the national budget.

He also maintained that the move is consistent with the government’s tax reforms aimed at reducing multiple levies, pointing out that VAT on fuel, excise taxes on telecoms, and the cybersecurity levy have already been suspended to cushion hardship for citizens and small businesses.

“The reforms are about harmonisation and efficiency, not about increasing the tax burden,” he said.

Oyedele concluded that migrating the surcharge from the FERMA Act into the new tax law provides a more coherent and forward-looking framework that can respond to future infrastructure and climate challenges.