WITH President Bola Ahmed Tinubu’s recent resolve to go ahead with the newly passed law that provides for five percent tax on refined petroleum products, Nigerians buying petrol must be prepared to begin paying about additional N45 for each litre they purchase come 2026, if the price remains unchanged at about the rate of N900. This is one of the fall-outs of the 2025 Nigeria Tax Administration Act passed into law on June 26, 2025.
Remarkably, the originating tax reforms bill as presented by President Bola Ahmed Tinubu remains one of such legislative assignments that brought out the best in Nigerian legislators and concerned citizens as far as dialogue and structured debates are concerned.
The initial skepticism posed by the proposed law was removed by the Tinubu’s approach of ensuring that all stakeholders were carried along in the making of the law. Town hall meetings were held in many quarters of the six geopolitical zones of the country. The four major political parties were fully involved in the robust debate for the passage of the bill.
Tax is a mandatory financial charge or levy imposed on individuals or legal entities by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. In economic terms, taxation transfers wealth from households or businesses to the government. This in turn affects national economic growth and people’s welfare, which can be increased or decreased.
Some of the prominent types of taxation include; personal and corporate income taxes, wealth taxes, inheritance taxes, gift taxes, property taxes, capital gains tax, sales taxes (also known as Value-added-tax, VAT), use taxes, environmental taxes, payroll taxes, exercise duties, or tariffs as well as tax on tax, as with a gross receipts tax.
The Federal Government of Nigeria under the leadership of President Bola Tinubu spoke plainly, since inception in 2023 when it noted that the country’s tax policy was begging for reforms, especially in relation to multiple taxations, inequitable distribution of VAT and other aspects considered archaic. To actualize this ambition, the Nigerian leader approved the setting up of a presidential committee on Fiscal Policy and Tax Reforms on July 7, 2023 with Mr. TaiwoOyedele, a Fiscal Policy Partner and Africa Tax Leader at Price Waterhouse Coopers as its chairman.
At the end of the debates and before the presidential ascent to the bill, it was collectively and explicitly stated that the implementation of the law will commence in January, 2026. Bad as the petroleum tax provision may seem, it is absurd therefore to hear some political leaders with eye on cheap popularity condemning it. Their actions only go to confirm the popular notion that if you want to hide anything for a black man, the best place to keep it is inside a book. Obviously, these critics did not bother to go through the content of the reforms document while the debate lasted.
While it is morally wrong for a leader to promote anti-people legal acts, it is also a democratic offence for leaders to ignore laws that are meant to be implemented as part of their responsibility to the people.
Of the entire content of the bill that gave rise to the five per cent tax, the Value-Added Tax stood out as the most misunderstood. This was resolved and it became clear that it will be based on place of consumption and not production.
Meanwhile, barring any last minute change of heart by the president, Nigerians particularly those itching to take over power from the incumbent leader should begin to concern themselves with how to monitor the government’s administration of the new tax regime with a view to ensuring that those concerned are appropriately encouraged to comply with the law.
One of the ways of making people pay taxes is for them to see them, comply with the laws. In this case, the federal government must be continually taken up on its ability or otherwise to affect the maintenance of roads as it claims will be archived by the five percent petroleum tax with effect from early next year.
Since the final consumers do not, by law, pay this kind of tax directly to government coffers, adequate provisions must be made to guarantee its remittance to government by petroleum marketers. A callous attitude by companies in their accounting books in terms of remittances must be closely marked by recognised auditors and government financial regulatory agencies.
The current situation where the Nigerian National Petroleum Company Limited under the leadership of Bayo Ojulari cannot explain the shortcomings in its accounting books prepared by its own personnel to the National Assembly for over three months should be seen as abnormal in public accounting.
Round pegs should be placed in round holes in departments responsible for the accountability of Internally Generated Revenue. The books should be published at regular intervals for public knowledge.
Time has come for Nigerian citizens to hold themselves accountable for their terse ignorance and look aloof towards relevant documents pertaining to governance. They must equally identify societal self-acclaimed advocates for good governance but do not show thoroughness in their understanding of things that are done by government beyond seeking to boost their own personal ego.
