In a move that will bring relief to diesel importers, transporters and manufacturers, Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax, said that he is currently engaging the Federal Government to suspend the 7.5 percent Value Added Tax (VAT) on diesel given the impact of the rise in transportation and other costs as a result of petrol subsidy removal.
The Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), who has now taken an additional role as the Presidential Committee on tax made this known in a statement obtained by EnergyDay on Sunday in a tweet via his verified Twitter handle.
According to him, i am currently advocating for the 7.5% VAT on diesel to be suspended given the impact of rise in transportation and other costs as a result of petrol subsidy removal.
My Oyedele while reacting to critics who had alleged conflict of interest in his double capacity as a Partner at PwC and now a public officer holder, therefore stated that his interest has always been centred on public’s interest, adding that the advocacy will not change now whether he is advocating for the private sector or not.
“This has been consistent in my career spanning over 2 decades,” he said.
Citing some of the weakness of tax policies which according to him were not well thought-out, Oyedele revealed that excise tax increases on some products were announced for 2022 to 2024 by the former President Mohammadu Buhari but later escalated midway into implementation.
He noted that such policy somersault will not only hurt the sector being taxed but will make the investment climate uncertain and unattractive.
EnergyDay’s intelligence gathered that the Nigerian Customs Service (NCS) and the Federal Inland Revenue Service (FIRS) had concluded the plan to charge a 7.5% Value-added Tax (VAT) on diesel imported into Nigeria, in July, after the process was agreed in June 2023, since the product was not exempted from the payment of VAT based on the VAT Modification Order 2021.
The introduction of this tax was criticised by experts who expressed concerned about the impact it will have on the price of diesel, as they argued that the Nigerian citizens were still trying to adjust to the hike in the pump price of Premium Motor Spirit, popularly called petrol.
Mr. Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise [CPPE], who was one of the vocal critics of the policy had faulted the timing, adding that a 7.5% VAT on diesel might result in something around 5% to 10% increase in the cost of locally manufactured goods.
He said, “It will be difficult to give an estimate on the potential percentage increase a 7.5% VAT will cause on goods and services.
Dr. Muda therefore revealed that a new VAT on diesel could erode the profit margins of manufacturers if they refuse to increase the prices of goods and services.
EnergyDay gathered that the Oyedele’s Presidential tax committee, which is made up of experts from both the private and public sectors, has the sole responsibility of advising the government on various aspects of tax law reform, fiscal policy design and coordination, harmonization of taxes, and revenue administration.
As part of their duties, they are responsible for reviewing some of the draconic tax laws that are affecting the economy and forcing many companies to close down in the country.
The committee was set up by President Tinubu with the primary objective of enhancing revenue collection efficiency, ensuring transparent reporting, and promoting the effective utilization of tax and other revenues to boost citizens’ tax morale, foster a healthy tax culture, and drive voluntary compliance.