The 5% surcharge tax law on fuel is not a new tax introduced by the current administration , Taiwo Oyedele , Chairman Presidential Fiscal Policy & Tax Reforms Committee clarified on yesterday via his official X handle.
He said the provision already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007, noting that its restatement in the new Tax Act is for harmonisation and transparency rather than immediate implementation.
The resurfacing of the 5% surcharge tax law on fuel attracted public discourse recently with most Nigerians condemning its introduction.
Shedding lights on the subject matter which he addressed through “frequently asked questions, Oyedele posed: Did administration introduce a 5% surcharge on fuel?
“No. The surcharge is not new. It already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act). The new Tax Act only restates it for harmonisation and transparency. Hence, it was not part of the original tax reform bills submitted by the president to the National Assembly”. Does this mean th?? surcharge will commence in January 2026 when the new tax laws take effects?
“No. The surcharge does not take effect automatically with the new tax laws. It will only commence when the Minister of Finance issues an order published in the Official Gazette as stated under Chapter 7 of the Nigeria Tax Act, 2025. This safeguard ensures careful consideration of timing and economic conditions before implementation”, he said.
According to him, “Will the surcharge apply to all fuel products?
“No. Several energy products used by households are exempt. This includes household kerosene, cooking gas (LPG), and Compressed Natural Gas (CNG). Clean and renewable energy products are also excluded to align with Nigeria’s energy transition agenda”,
On why would government not abolish the charge, given the current hardship adn the risk of higher inflation?, he affirmed that, “the surcharge is designed as a dedicated fund for road infrastructure and maintenance. If implemented effectively, it will provide safer travel conditions, reduce travel time and cost, lower logistics costs and vehicle maintenance expenses, which will benefit the wider economy. This practice is virtually universal with over 150 countries imposing various charges ranging between 20 per cent to 80 per cent of fuel products to guarantee regular investment in road infrastructure”.
He added: “While subsidy savings will provide some funding, they are insufficient to meet Nigeria’s huge and recurring road infrastructure needs among other public finance needs. A dedicated fund ensures reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.
He also said: “The reforms have already reduced multiple taxes and removed or suspended several charges that directly affect households and small businesses, such as VAT on fuel, excise tax on telecoms, and the cybersecurity levy. By harmonising earmarked taxes, government is reducing duplication and ensuring a more efficient tax system.”
On amending the FERMA Act to remove the surchage, Oyedele, said that, “the surcharge has been removed from the FERMA Act and incorporated into the new tax laws which are designed to provide a forward-looking legal framework for Nigeria. Keeping this provision in place within a harmonised legal framework ensures Nigeria is prepared to address critical challenges, such as sustainable road financing and even climate change impacts. It is not about immediate implementation, but to ensure the law provides a clear and effective framework for when it becomes necessary in the future.”
