FG May Suspend VAT On Diesel To Cushion Impact Of Fuel Subsidy Removal On Businesses

In a bid to cushion the negative impact of the harsh operating environment on business caused by the removal of petrol subsidy, the Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele, has said that the Value Added Tax on Automotive Gas Oil also known as diesel should be suspended.

Oyedele said this when he appeared on Channels Television’s Sunrise Daily programme on Wednesday.

Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers was appointed by President Bola Tinubu to head the committee whose scope includes fiscal governance, tax reforms and growth facilitation.

His suggestion is coming barely 24 hours after President Bola Tinubu inaugurated his committee with a charge to boost revenue to a level where Nigeria’s tax to Gross Domestic Product ratio will rise to 18 per cent in the next three years.

Oyedele explained further that the nation’s fiscal governance covers issues ranging from debt limit to the ratio of deficit to Gross Domestic Product (as indicated in the Fiscal Responsibility Act), reporting revenue generation and the quality of spending.

He stated further that there is a significant tax gap of over N20trn, adding that many people that are within the tax net have been evading payment of taxes.

He said, “What the President wants us to do is that within the first 30 days, there are those low-hanging fruits that people have generally agreed that this is a problem but nobody has done anything about it.

“Personally, for example, this is not promising that it would be done, but I think that we should suspend VAT on diesel because we removed fuel subsidy on petrol and prices are going up.

“We are going to table it before the committee. These are the things we want to do in the first 30 days.

“Some of them are in the tax net with one or two fingers. In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones, and yet collect more.”

Oyedele stated that Nigeria’s revenue generated through tax is one of the lowest in the world, noting that there is need to correct this in a manner that would boost revenue to finance key programmes of government.

For the nation’s economy to benefit from revenue generation, he said the collection of revenue should be assigned primarily to the Federal Inland Revenue Service, while reducing the revenue generation burden on the Federal Government’s Ministries, Departments, and Agencies.

He added, “At the Federal Government level alone, we had 63 MDAs that were given revenue targets in the 2023 budget, these agencies are being distracted from their primary function which is to facilitate the economy.

“Every state should just have one law that covers everything collectible by local government and the state government.”

He said the laws that would be created for tax collection should be transparent.