Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has said that the five per cent surcharge on petroleum products reinstated in the new tax law is aimed at harmonising and providing transparency in the tax system.
He said this in a post on Saturday, September 6, while clarifying what is true and not true about the surcharge.
“The charge is not a new tax introduced by the current administration. The provision already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007,” Oyedele said.
The controversial surcharge has raised worries from concerned Nigerians who believe it could damage Nigeria’s fragile economic recovery and worsen inequality and hardship for Nigerians.
Pinnacle Daily reported earlier that ActionAid Nigeria specifically warned that when added to current fuel costs, it would hit harder on low-income households and small enterprises.
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President Bola Tinubu had on June 26 this year signed the Nigeria Tax Administrative Act to take effect from January 2026, which includes the five per cent surcharge on refined petroleum products.
It aims to boost non-oil revenue and promote fiscal sustainability.
Addressing some critical questions the matter has raised, Oyedele said the surcharge has existed under the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act).
“The new Tax Act only restates it for harmonisation and transparency,” Oyedele stressed.
He clarified that the surcharge does not take effect automatically with the new tax laws but will commence when the Minister of Finance issues an order to be published in the official gazette as stated under Chapter 7 of the Nigeria Tax Act, 2025.
According to the tax committee chairman, the surcharge does not apply to all petroleum products, as several others, including household kerosene, cooking gas (LPG), and compressed natural gas (CNG), have been exempted.
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Allaying fears of the negative impact it could have on Nigerians, Oyedele said 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, and 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% and 80% of fuel products to guarantee regular investment in road infrastructure,” he said.
He maintained that the subsidy savings can only provide some funding and are insufficient to meet Nigeria’s huge and recurring road infrastructure needs, among other public finance needs.
He said the surcharge provides a dedicated fund to ensure reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.
Oyedele noted the tax reforms have already reduced multiple taxes and removed or suspended several charges that directly affect households and small businesses, such as value-added tax (VAT) on fuel, excise tax on telecoms, and the cybersecurity levy.
“By harmonising earmarked taxes, the government is reducing duplication and ensuring a more efficient tax system,” he said.
He further clarified that the surcharge has been removed from the FERMA Act and incorporated into the new tax laws.
“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 about ensuring the law provides a clear and effective framework for when it becomes necessary in the future,” Oyedele added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
