Proposed fuel tax for infrastructure

Nigerians are outraged at the prospect of an additional tax burden following the Federal Government’s announcement that it will soon start implementing a five per cent tax on fossil fuels for roads and bridges construction and maintenance.

The tax is built into the Nigerian Tax Administration Act, NTAA, which President Bola Tinubu recently signed into law. According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Administration Committee, the “surcharge” is “not new” but already a part of the existing Federal Roads Maintenance Agency (Amendment, FERMA) Act, 2007. The tax will not affect domestic consumption and clean energy fuels such as kerosene, cookinga gas and compressed natural gas, CNG.

Indeed, this will not be the first time that the Federal Government has taken this measure. The late General Sani Abacha had during his regime, raised the price of refined petroleum products and dedicated the difference between the old and new prices to the Petroleum (Special) Trust Fund, PTF, for emergency intervention in infrastructure renewal and other social sector projects.

Following Abacha’s demise and Olusegun Obasanjo’s emergence as an elected president, the Fund was abolished. In its place was created the FERMA. Perhaps due to poor funding, FERMA has not  been as effective as the defunct PTF in addressing road infrastructure renewal. Indeed, under FERMA’s watch, no less than 30 stretches of federal roads have almost totally broken down. Possibly the worst of all are the Benin Bypass, Benin-Asaba highway, Benin-Warri highway, East-West road, to mention but a few.

Oyedele was right in pointing to the fact that dedicated taxation of certain goods and services are used in other, more developed countries, to maintain public infrastructure. Indeed, despite the large-scale corruption associated with it, the PTF went far in its assigned mandate which touched every part of the country, though unevenly. If not for the policy disruption, our federal roads and bridges would probably be in worse shape.

Our worry, however, is the extra burden this tax will place on the shoulders of already over-burdened Nigerians. Coming at a time  Nigerians are forced to pay more than 400 per cent of the cost of petrol and diesel some 27 months ago, this tax is ill-timed. Since Tinubu, a well-known tax exponent, came into power, subsidies have also been removed from prime electricity consumers. Nigerians are still drowning from the floating of the Naira.

Federal Government’s efforts to stabilise the economy has not impacted the people, neither have its so-called palliatives. We strongly believe that the huge sums being wasted on the white elephant Lagos-Calabar Coastal Highway and Lagos-Sokoto Highway, should have been invested on reconstruction of broken federal roads and bridges. We are not opposed to the tax per se, but the timing is inauspicious.

Don’t tax Nigerians to death!

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