The Nigerian government announced, on Sunday, the waiver of Value Added Tax (VAT) on diesel for the next six months to address the impact of petroleum subsidy removal in the country.
The waiver is part of the resolution reached during the meeting between the labour unions and the government delegation, information minister Mohammed Idris said in a late Sunday statement.
The meeting was held a few hours after Mr Tinubu addressed Nigerians on the occasion of Nigeria’s 63rd Independence Anniversary.
“VAT on diesel will be waived for the next six months,” Mr Idris wrote.
VAT is a consumption tax which is administered by the Federal Inland Revenue Service (FIRS).
It was introduced in Nigeria with the enactment of VAT Act No. 102 of 1993, which replaced the Sales Tax, which had been in operation since 1986 by the Federal Government Decree No. 7 of 1986.
VAT was, 13 January 2020, revised from five per cent to 7.5 per cent after former President Muhammadu Buhari signed the Finance Act 2020 into law.
The Nigerian government in June confirmed that it had commenced the implementation of the payment of 7.5 per cent VAT on Automotive Gas Oil (AGO) also known as diesel.
On 9 August, the Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele said VAT should be suspended on diesel.
Mr Oyedele who disclosed this while appearing on Channels Television’s Sunrise Daily breakfast programme said the VAT suspension will help cushion the harsh economic effects of the fuel subsidy removal.
“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,” Mr Oyedele said at the time.
The labour unions are scheduled to commence strike on Tuesday (3 October) to protest the hardship caused by the removal of subsidy on petrol. However, it is uncertain whether they will proceed with the strike or suspend it.
Mr Tinubu announced the removal of subsidy on petrol on 29 May during his inauguration as president. Since then, the price of petrol has increased by about 200 per cent across Nigeria and has led to an increase in the prices of goods and services.
Read the full statement by the minister below.
PRESS STATEMENT
PRESIDENT TINUBU APPROVES N35,000 PROVISIONAL WAGE AWARD FOR FG WORKERS
President Bola Tinubu has approved N35,000 provisional wage award for all treasury-paid federal government workers for six months, following further consultations with the Federal Government delegation that met with the leadership of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) earlier on Sunday.
It will be recalled that at the meeting between both parties, the Federal Government pledged its commitment to fast-track the provision of Compressed Natural Gas (CNG) buses to ease public transportation difficulties associated with the removal of the PMS subsidy.
The Federal Government also committed to the provision of funds for micro and small-scale enterprises as well as waivers on VAT on diesel for the next 6 months.
Furthermore, the Federal Government announced that it will commence payment of N75,000 to 15 million households at N25,000 per month, for a three-month period from October-December 2023.
RESOLUTIONS
In light of the discussions held during the meeting between the Federal Government and Labour representatives, the following were the major highlights:
i) The Federal Government urged the Labour unions not to embark on strike action as the issues in dispute can only be resolved when workers are at work.
ii) Labour Unions made case for higher wage awards.
iii) A sub-committee is to be constituted to work out the details of the implementation of all items regarding government interventions to cushion the effect of fuel subsidy removal.
iv) The lingering matter of the Road Transport Employees Association of Nigeria (RTEAN) and the National Union of Road Transport Workers (NURTW) in Lagos State needs to be addressed urgently.
v.) NLC and TUC will consider the offers by the Federal Government with a view to suspending the planned strike to allow for further consultations on the implementation of the resolutions above.
Governor Abdulrazak Abdulrahman of Kwara State and Chairman of the Nigeria Governors Forum (NGF) and Governor Dapo Abiodun of Ogun State, participated virtually in the meeting, chaired by the Chief of Staff to the President, Femi Gbajabiamila.
Also in attendance were the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the Minister of Information and National Orientation, Mohammed Idris, the Minister of Labour and Employment, Simon Lalong, the Minister of State, Labour, Nkeiruka Onyejeocha, the Minister of Budget and Economic Planning, Abubakar Atiku Bagudu, the Minister of Humanitarian Affairs and Poverty Alleviation, Betta Edu, the Minister of Industry, Trade and Investment, Doris Uzoka-Anite, the Head of Service of the Federation, Dr. Folasade Yemi-Esan and the National Security Adviser (NSA), Mallam Nuhu Ribadu.
The labour delegation was led by NLC President, Joe Ajaero, Dr Tommy Etim Okon, Deputy President, TUC, NLC General Secretary, Emma Ugboaja, TUC General Secretary, Nuhu Toro, among others.
Mallam Mohammed Idris
Minister of Information and National Orientation
October 1, 2023