In hopes of easing the economic strains arising from the withdrawal of subsidies on Premium Motor Spirit (PMS), commonly known as petrol, the chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele, has recommended the suspension of Value Added Tax (VAT) on Automotive Gas Oil (AGO), also known as diesel.
Oyedele conveyed this proposal during an appearance on Channels Television's Sunrise Daily breakfast programme on Wednesday, August 09, 2023.
The call comes in the wake of President Bola Tinubu's recent decision to remove the subsidy on petrol, causing a surge in its price at the pump. Oyedele, formerly a Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), emphasised the urgency to address pressing economic concerns within the initial 30 days of the committee's tenure.
Oyedele expressed, "Personally, for example, this is not promising that it would be done. 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."
The Presidential Committee, inaugurated by President Tinubu in Abuja on Tuesday, August 08, is poised to accomplish crucial tax reforms, the streamlining and harmonisation of tax laws, executive order issuance, regulatory implementation, and more over the following six months. Although the committee has a one-year timeline for policy implementation, Oyedele clarified that the 30-day, six-month, and one-year milestones run concurrently.
The committee also intends to address excessive bank charges and reduce the exorbitant number of levies and taxes paid by businesses. Oyedele revealed that businesses are burdened by as many as 65 to 70 different taxes and levies, while the committee's objective is to curtail this number to around 10.
The abrupt elimination of petrol subsidy, an "inauguration gift" from President Tinubu to Nigerians on May 29, 2023, was met with mixed reactions.
This early termination of subsidy led to a rapid escalation in petrol prices, soaring from approximately ₦184 to ₦600 per litre. Consequently, Nigeria's headline inflation surged to 22.79% in June from the previous month's 22.41%, primarily due to soaring food prices and increased transportation costs as a result of the subsidy withdrawal.