If the federal government (FG) does not abandon the proposed five percent tax on petroleum goods, the Trade Union Congress (TUC) has vowed to conduct a statewide strike within two weeks.
Additionally, the government’s proposal to impose a five percent fuel levy has been rejected by the organized private sector, which emphasizes that its implementation would exacerbate inflation across the country.
Following days of anticipation that the fee may go into force in January 2026, the Trade Union Congress made its announcement. In a nation where fluctuations in fuel prices frequently lead to turmoil, the rumor immediately sparked public alarm. The tax committee of President Bola Tinubu pushed back, stating that no start date has been chosen and emphasizing that the finance minister alone is in charge of determining whether or when the policy will be put into effect.
The government’s larger budgetary changes, which include a five percent tax on petroleum items, are intended to increase income. However, the elimination of gasoline subsidies, increased inflation, and currency devaluation have already severely impacted Africa’s largest oil producer.
TUC President-General Festus Osifo and Secretary-General N.A. Toro stated that the plan is economic evil that would exacerbate the hardships of regular Nigerians.
Nigerians cannot be used as sacrificial lambs for the government’s ongoing economic experiments. It has opted to further squeeze citizens dry rather than provide relief, jobs, and answers. The union leaders went on, “This is unacceptable.”
The TUC issued a warning, saying that if the government went ahead with the levy, it would face “total nationwide resistance” from its affiliates, state councils, and allies, including student unions, professional associations, civil society organizations, market leaders, and faith-based organizations.
Nigerians should receive economic justice instead of “endless punishment,” the union said, adding that strike action was definitely on the table if Abuja disregarded its warning. When the tax is put into effect, it will be applied to fossil fuels like gasoline and diesel but not to cleaner alternatives like compressed natural gas, kerosene, cooking gas, and other renewable energy sources.
According to the union statement, “enough is enough.” “Instead of constant punishment, Nigerians should receive economic justice.” The tax clause is not brand-new. FERMA was initially established as a statutory organization tasked with overseeing and maintaining federal roads by the Federal Roads Maintenance Agency Act of 2002.
A 2007 amendment to the Act provided a funding mechanism through a five per cent user charge on petrol and diesel sales, with 40 per cent of proceeds allocated to FERMA and 60 per cent directed to State Roads Maintenance Agencies.
OPS rejects surcharge
Members of the organised private sector are hostile to the suggestion of a five per cent tax on petroleum products. They believe that any additional tax, regardless of how little the percentage, will drive inflation and worsen the living standards of Nigerians.
The five percent tax that will be collected at the point of sale of gasoline and diesel will be passed on to customers who may cut back on their use, according to Gabriel Idahosa, president of the Lagos Chamber of Commerce and Industry. The transportation industry will be most negatively impacted.
If the tax is going to be on the pump price, it indicates that the expense has already been passed on to the customer, Idahosa stated. Naturally, it also implies that the current decline in the consumption of such goods will be made worse because many people currently use their automobiles sparingly and enacting the tax will increase the strain on the public transit system.
As more people, particularly workers, depend on the public transit system, the president of the LCCI anticipated a minor but additional difficulty from the program. How the tax will be implemented and enforced is unknown.
Idadosa assessed the possibility of two scenarios: either all stations will have a five percent rise in revenue due to enforcement, or they will tread carefully as they push out their rivals. He continued, “You can find that the overall effect will not be as bad as just multiplying everything by five percent if some competitors, for example, absorb one or two percent out of this five percent and only add a three percent increase on their price.”
Idahosa continued to encourage optimism, arguing that the 5% increase in gasoline and diesel sales would only result in a “slight increase, but not going to be really significant.” He clarified: “It’s a base problem. There is a significant difference between adding five percent to N10 and adding five percent to N100. Since the base is so low, it won’t be all that dramatic. He cautioned, however, that the “slight tax increase” would trigger a catastrophe since transporters will likely exploit inflation as prices for other goods rise.
The president of the LCCI urged the federal government to expand the production and distribution of substitutes. He was concerned about the sluggish uptake of compressed natural gas and other renewable energy sources. “Only about 100,000 vehicles nationwide have been converted to CNG as of the last count,” he bemoaned. And that has been the issue: the conversion rate is poor. Most towns, including Lagos, have extremely few CNG facilities.”
In a similar vein, Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria, criticized the 5% tax on gasoline products, pointing to excessive taxation and insufficient social safety nets.
“We are paying a lot of taxes, both directly and indirectly,” Egbesola said, adding that “businesses are closing down by the day” and that “it is concerning when a country does not have enough social safety nets and inflation keeps hitting the people; the government find ways to squeeze the little money out of their pocket through taxation and other levies.
” Egbesola made the case that the federal government should implement more tax relief rather than imposing new taxes.
Although he praised the achievements of the President Bola Tinubu government, he cautioned that the persistent suffering on the streets is not diminished by macroeconomic advancements. “Yes, the macroeconomy has improved, but as it stabilizes, the impact of the microeconomy on small firms and households is becoming more unstable. It is regrettable what the nation is going through.
In agreement with the LCCI, the president of ASBON urged the government to implement measures to mitigate the impact of the proposed tax. “It is not always on paper when the economy is doing well,” he said. It exists in the citizens’ and people’s life. Right now, things are getting worse, and I just hope that we don’t hit a breaking point.
Again, levies and taxes of any kind are unacceptable, and some of us in the business community condemn them. We chastise it. In no way do we endorse it. Taiwo Oyendele, the chairman of the Presidential Committee on Tax Reform, was acknowledged by Egbesola, who also pointed out that the timing of the introduction of the 5% petrol surcharge is crucial.
“The five percent tax should not be implemented right away, but it will eventually. The ideal period is when the economy is somewhat stable and people’s incomes are in line with their expenses, even if they are not higher,” he said. “However, the time is not now, and I don’t see it being right even in the near future, as more people are currently falling below the poverty line.”
Segun Kuti-George, the National Vice President of the National Association of Small-Scale Industrialists, criticized the 5% petroleum product tax as an unnecessary hardship. “I think it’s one tax too many for the Nigerian people right now,” he emphasized.
Kuti-George was concerned that raising the sales tax on petroleum products would have an impact on input costs and cause inflation. “I don’t think we can afford to stoke inflation at this time,” he continued. As I have stated, the only government that lacks innovation and only relies on taxing is this one.
“There are other ways by which the government can make money,” he said, advising the federal government to innovate its revenue push. The tax adds to the burden.
