Daniel Otera
The Federal Government of Nigeria has moved to address growing public unease over the 5 per cent fuel surcharge included in the Nigerian Tax Administration Act 2025, assuring citizens that it is not a new tax and will not be automatically enforced in 2026. The clarification comes amid widespread concerns and threats of industrial action, with stakeholders urging transparency and accountability in the implementation of fiscal policies.
On Tuesday, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, spoke to journalists in Abuja to clear the air on the controversial surcharge.
“The 5 per cent surcharge has existed since 2007. Its inclusion in the new law is merely for harmonisation and transparency. There is no immediate plan to implement any surcharge, and as of today, no commencement order has been issued or is being prepared,” Edun stated.
He explained that the provision, first introduced under the Federal Road Maintenance Agency (FERMA) Act of 2007, was designed as a user charge to fund road maintenance and development across the country.
According to Edun, the surcharge allocates 40 per cent of its proceeds to FERMA for the upkeep of federal roads, while the remaining 60 per cent goes to state road management agencies.
“The original purpose was to ensure better-maintained roads, which are critical for mobility, economic growth, and public safety,” he said.
According to data from the Federal Ministry of Works, Nigeria’s vast road network, spanning over 195,000 kilometers, is in urgent need of maintenance. In 2024, over 50% of the federal roads were classified as being in poor condition, highlighting the severe infrastructural deficit in the country. The government had previously implemented a surcharge to address these road maintenance challenges. However, Finance Minister Wale Edun clarified that the surcharge’s inclusion in the 2025 Nigerian Tax Administration Act is part of a broader effort to streamline and simplify Nigeria’s tax laws, ensuring greater clarity and compliance, rather than imposing additional burdens on the public.
The Nigerian Tax Administration Act 2025, set to take effect on January 1, 2026, represents a key element of President Bola Tinubu’s fiscal reform agenda. The Act consolidates multiple tax laws into a single framework, aiming to eliminate overlapping taxes, reduce compliance burdens, and boost revenue mobilization. According to the Federal Inland Revenue Service (FIRS), Nigeria’s tax-to-GDP ratio stood at just 10.86% in 2024, significantly lower than the African average of 16.5%. This gap underscores the need for urgent reforms to enhance the country’s revenue collection and fiscal health. Edun emphasized that the government’s primary focus is on improving tax governance, closing revenue leakages, and creating a more efficient tax system, rather than introducing new burdens on the citizens.
“Our priority is to strengthen tax governance, block revenue leakages, improve efficiency, rather than just levy new taxes, charges, and costs,” he said.
The removal of Nigeria’s petrol subsidy in May 2023 has triggered a significant increase in fuel prices, intensifying the country’s ongoing economic challenges. Prior to the subsidy removal, the average price of petrol was ₦185 per litre. However, in the wake of the policy change, the price of petrol tripled, surging to over ₦600 per litre. According to the National Bureau of Statistics (NBS), this sharp increase has pushed transport fares and food prices to record highs, further straining the already overburdened Nigerian population.
Coupled with this surge in fuel costs, the country’s inflation rate has reached an alarming 34.19% as of August 2025. This high inflation rate has deepened the cost-of-living crisis, making it increasingly difficult for Nigerians to meet basic needs. The compounded effects of skyrocketing petrol prices and runaway inflation are felt most acutely by working-class families, whose purchasing power has been severely diminished.
In response to the growing economic hardship, the Trade Union Congress (TUC) has raised concerns about a proposed surcharge on petroleum products. The TUC has warned that if the surcharge is implemented, it could worsen the already dire economic situation, and has threatened a nationwide strike. This situation underscores the urgent need for government intervention to address the root causes of Nigeria’s economic malaise, while balancing the financial burden on its citizens.
The Obidient Movement, a prominent socio-political group, has also voiced strong opposition. In a statement on Monday, its National Coordinator, Dr. Yunusa Tanko, described the surcharge as “a policy built on noble intentions, but destined for misery.” He argued that fuel is not a luxury in Nigeria, and additional taxes would disproportionately harm the poor. “For decades, Nigerians have been fed the same promises: new levies will ‘fix our roads,’ ‘power our hospitals,’ and ‘transform our economy.’
Instead, trillions vanish into the pockets of corrupt elites while our highways crumble, transport costs skyrocket, and ordinary Nigerians are pushed deeper into poverty,” Tanko said.
He called for progressive taxation on luxury consumption and cuts to wasteful government spending, urging the government to establish transparent mechanisms to ensure accountability before introducing any new charges.
The controversy surrounding the surcharge underscores the delicate balance the Tinubu administration must strike between fiscal reforms and public sentiment.
The recent introduction of additional fuel surcharges has sparked significant public backlash, especially considering Nigeria’s ongoing economic challenges. The removal of the petrol subsidy in May 2023 led to a dramatic increase in fuel prices, with the cost of petrol tripling from ₦185 per litre to over ₦600, as reported by the National Bureau of Statistics (NBS). This surge in fuel prices, coupled with a staggering inflation rate of 34.19% in August 2025, has intensified the cost-of-living crisis, sending transport fares and food prices to record highs. The soaring fuel prices and inflation have further strained households, already grappling with economic hardship.
The Trade Union Congress (TUC) has voiced strong opposition to the surcharge, warning that its implementation could exacerbate the already dire economic situation. The TUC has threatened a nationwide strike if the surcharge is imposed, citing the additional burden it would place on the already struggling populace.
Since taking office in May 2023, President Bola Tinubu has introduced bold economic reforms, including the unification of exchange rates and the removal of fuel subsidies. While these policies have increased government revenue, they have also triggered significant economic strain. The International Monetary Fund (IMF) reported that Nigeria’s public debt stood at ₦121.67 trillion in 2024, highlighting the urgent need for improved revenue generation to reduce borrowing. However, critics argue that the timing of additional fuel-related charges is ill-advised, given the economic pressures facing the Nigerian public.
Edun assured Nigerians that the implementation of the 2025 Act would be gradual, with extensive stakeholder engagement and public awareness campaigns.
“Before any such charge can take effect, a formal commencement order must be issued by the Minister of Finance, and it must be published in the government gazette,” he said.
The minister’s remarks aim to rebuild public trust, but with fuel remaining a politically sensitive issue in Nigeria, Africa’s largest oil producer yet a major importer of refined petroleum products, the government faces an uphill task in convincing citizens of the merits of its reforms.