Starting January 2026, Nigerians will face an additional financial burden at the fuel pump as the Federal Government rolls out a new 5% fuel tax under the recently signed Harmonized Tax Act.
The legislation, signed into law by President Bola Ahmed Tinubu, has sparked widespread concern among citizens already grappling with soaring fuel prices and economic challenges.
The new tax will apply to every litre of petrol, diesel, and other petroleum products, further inflating costs for motorists, transport operators, and businesses reliant on fuel.
Industry experts predict that the levy could increase fuel prices by at least N50 per litre, depending on market dynamics, exacerbating the cost-of-living crisis in the country.
In the latest episode of So This Happened (EP 334), analysts reviewed the implications of the tax, highlighting its potential to ripple across the economy.
Transporters, who form the backbone of Nigeria’s logistics and commerce, expressed frustration, warning that the tax will force them to hike fares, which could drive up the cost of goods and services nationwide.
“We’re already struggling with fuel costs above N1,000 per litre in some areas. This tax will make things worse for everyone,” said Chukwudi Eze, a commercial bus driver in Lagos.
Small and medium-sized enterprises (SMEs), particularly those dependent on generators due to unreliable electricity, are also bracing for impact.
“Fuel is our biggest expense. Adding this tax feels like a punishment for trying to survive,” said Aisha Mohammed, a salon owner in Abuja.
The Federal Government, however, defends the policy, stating that the tax is part of efforts to streamline revenue collection and fund critical infrastructure projects.
In a statement, the Ministry of Finance claimed the Harmonized Tax Act would “enhance fiscal efficiency and support Nigeria’s development goals.”
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