Increase In VAT Charges On Diesel Poised To Affect Prices Of Consumer Goods

Car refueling on a petrol station closeup

Following the FG implementation of the payment of 7.5 per cent VAT on diesel, Stakeholders in the Oil and Gas industry have revealed that the proposed 7.5 per cent Value Added Tax changes (VAT) on imported automotive gas oil, popularly called diesel, would increase its landing costs in the Nigerian market.

This increase, they believe, will greatly affect manufacturers powering their machines with diesel, as well as consumers who are the end users of these goods.

Mr. Emmanuel Iheanacho, Chairman, Integrated Oil and Gas Ltd., told the News Agency of Nigeria (NAN) on Tuesday in Lagos that there was a need for Federal Government to review the decision.

He said, “In regard to whether this cost would ultimately fall, there is no doubt that this tax would in the final analysis be borne by the end consumers of the fuel commodity.

“As to the wisdom of applying the VAT at this time when prices are rising in the face of the decision to discontinue the subsidy on petrol, l would submit that the final word on the matter is an acceptable policy prerogative of the government.

“In any case, we must not lose sight of the fact that the 7.5 per cent VAT charges going into the government’s pocket equates to a net loss of buying power for the citizen diesel consumer,” he said.

“The VAT money in the government’s coffers to be spent on development projects or a more financially empowered citizen with the 7.5 per cent VAT amount conceded to him as additional spending capacity? The answer is a political decision.

“Regarding the matter of subsidies on petrol recently discontinued, the removal of the subsidy on petrol is a logical and intuitively reasonable development which time had come.

” The subsidy payments resulted in more distortion and inequity in operation than any good which may have been envisaged”, Iheanacho added.

The former minister of interior said that the timing of the application of VAT on diesel could possibly have been deferred to a more auspicious occasion when the incidental cost pressures on citizens would not be so acutely felt.

Source: NAN

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