The Alliance for Economic Research and Ethics has called on the Federal Government to reject the International Monetary Fund’s (IMF) recommendation for new taxes on fuel, telecommunications services, and consumption.
In a policy statement released on June 14 by its chairman, Dele Oye, the think tank group warned that such measures would worsen poverty, raise business costs, and deepen economic hardship for millions of Nigerians.
It argued that even though the IMF correctly identified Nigeria’s revenue challenges, its proposed solutions were ill-suited to the country’s current economic realities.
Pinnacle Daily reports that the IMF, in its 2026 Article IV Consultation report, recommended new taxes on petroleum products and telecommunications services, an expansion of value-added tax (VAT) to fuel products, and a further increase in the VAT rate as part of efforts to boost government revenue and create fiscal space.
However, the Alliance described the recommendations as “the wrong prescription at the wrong time” for an economy grappling with rising poverty, high business costs, and weak social protection systems.
According to the group, the first reason Nigeria should reject the recommendations is the country’s worsening poverty situation.
The Alliance noted that the number of Nigerians living below the poverty line rose from about 83 million in 2019 to an estimated 140 million in 2025.
It argued that imposing additional taxes on fuel, telecommunications, and consumer spending would place further pressure on households already struggling with declining purchasing power.
The second concern raised by the group is what it described as the hidden tax burden already borne by businesses.
The Alliance argued that many Nigerian firms operate under extremely high borrowing costs, multiple layers of taxation, unreliable electricity supply, exchange rate volatility, and security-related expenses.
READ ALSO:
- Reject Sugar Tax Bill, CPPE Tells Reps, Warns of Job, Investment Losses
- IMF Cuts Nigeria’s 2026 Growth Outlook to 4.1% on Middle East War Shock
- FG: IMF Report Confirms Tinubu Reforms Are Working
- Nigeria’s Inflation Rises to 15.93% as Core Pressures Persist
- After Losing Primary, Amaechi Becomes Atiku’s Running Mate
It cited the Central Bank of Nigeria’s (CBN) monetary policy rate of 26.5 per cent and a maximum commercial lending rate of 35.17 per cent as evidence that businesses are already facing severe financing constraints.
“Nigerian enterprises do not merely pay taxes; they survive a taxation ecosystem,” the group said.
Its third objection focused on the absence of adequate social protection, noting that Nigeria spends only a small fraction of its gross domestic product on social protection and that social safety net coverage remains limited.
According to the Alliance, even the IMF acknowledged that tax reforms should take into account poverty and food insecurity and that support systems should be in place before additional taxes are imposed.
The fourth issue relates to the proposed reintroduction of excise duties on telecommunications services.
The Alliance argued that the recommendation contradicts the Federal Government’s decision in 2025 to abolish the five per cent excise tax on telecom services in order to reduce costs for consumers.
The group said telecommunications remains one of Nigeria’s most important growth sectors, supporting digital payments, financial inclusion, mobile banking, and e-commerce.
“Taxing connectivity is like taxing oxygen in a hospital ward,” the Alliance said, arguing that higher telecom taxes would undermine digital inclusion and economic participation.
The fifth concern centres on the IMF’s recommendation to extend VAT to fuel products and increase the VAT rate.
According to the Alliance, such a move would increase transportation costs, raise food prices, and add fresh inflationary pressures to an economy where households are already facing rising living costs.
The think tank noted that fuel prices have increased sharply since the removal of petrol subsidies and warned that additional taxes on fuel would be passed on to consumers through higher prices for goods and services.
The sixth issue raised by the Alliance is the IMF’s emphasis on creating new taxes instead of improving tax administration.
The group pointed to the IMF’s own estimate that administrative reforms could generate revenue equivalent to 3.1 per cent of GDP without introducing additional levies.
It also highlighted the growth in tax collections, which rose from ₦10.1 trillion in 2022 to ₦28.3 trillion in 2025, arguing that improving compliance and reducing leakages would yield better results than imposing new taxes on consumers.
The seventh reason advanced by the group is the need for broader structural reforms rather than additional taxation.
The Alliance called for the rationalisation of tax incentives granted to extractive industries, a reduction in the cost of governance, the monetisation of government assets, sustained action against oil theft, lower interest rates, and efforts to formalise the large informal sector.
According to the group, these measures would expand the revenue base and stimulate economic activity without placing additional burdens on households and businesses.
The Alliance acknowledged that Nigeria’s tax-to-GDP ratio remains low by African standards and agreed that government revenue must increase. However, it insisted that the country’s immediate priority should be supporting economic recovery rather than introducing new taxes.
“Ignore the IMF’s request for new taxes. Not because taxation is evil, but because the timing is wrong, the targets are wrong, and the consequences would be devastating,” the group said.
It added that Nigeria has already implemented major economic reforms, including exchange rate unification, fuel subsidy removal, tighter monetary policy, and new tax legislation, and argued that households and businesses need time to recover before facing additional fiscal measures.
The Alliance therefore called on the Federal Government to reject new taxes on fuel and telecommunications services, improve tax administration, reduce revenue leakages, lower the cost of governance, and strengthen social protection programmes before considering further tax increases.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X