Federal Government Announces VAT Exemption on Diesel for Six Months

Federal Government Grants Six-Month VAT Exemption on Diesel

In response to the recent removal of the fuel subsidy, the Federal Government of Nigeria has taken steps to alleviate the impact by declaring a value-added tax (VAT) exemption on diesel for the next six months.

This significant announcement was made public by Femi Gbajabiamila, the Chief of Staff to President Bola Tinubu, following extensive discussions with the leadership of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC).

Key Resolutions and Relief Measures

The discussions yielded several key resolutions aimed at addressing the challenges brought about by the fuel subsidy removal:

  • A provisional wage increment of N25,000 has been approved for all treasury-paid federal government workers, with this increase scheduled to be implemented over a six-month period.
  • The Federal Government has committed to expediting the delivery of Compressed Natural Gas (CNG) buses to mitigate the transportation challenges arising from the removal of the Petroleum Motor Spirit (PMS) subsidy.
  • Funds will be allocated specifically for micro and small-scale enterprises to support economic growth and sustainability.
  • The Federal Government has acknowledged the significant spike in diesel prices, with consumers now paying an average of N854.32 per liter, reflecting an 8.57% increase compared to the previous year’s N786.88 per liter.
  • Starting from October 2023 and spanning three months, the Federal Government will initiate payments of N75,000 to 15 million households, disbursing N25,000 monthly.

Concerns Over Diesel Prices and VAT Impact

The National Bureau of Statistics had reported a worrisome trend in diesel prices, attributing the surge to a combination of factors, including a 7.5% VAT and forex challenges.

This surge saw diesel prices rise from N650 per liter to nearly N950 per liter. Bennett Korie, the President of the Natural Oil and Gas Suppliers Association of Nigeria, highlighted the substantial impact of VAT on diesel, contributing to soaring pump prices nationwide.

Resolution of Labor Disputes and Further Discussions

The meeting, attended by prominent figures such as Lagos State Governor Babajide Sanwo-Olu, Kwara State Governor Abdulrazak Abdulrahman, and Ogun State Governor Dapo Abiodun, also addressed ongoing disputes between the Road Transport Employees Association of Nigeria (RTEAN) and the National Union of Road Transport Workers (NURTW) in Lagos State.

Hopeful for Resolution and Continued Discussions

Both the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are currently reviewing the propositions made by the Federal Government with the intention of potentially suspending their planned industrial action.

This would allow for further discussions to refine and implement the resolutions. Mallam Mohammed Idris, the Minister of Information and National Orientation, emphasized the government’s commitment to addressing these pressing issues, underscoring the importance of productive solutions while workers remain at their posts rather than resorting to strikes.

The labor delegation, led by NLC President Joe Ajaero and comprising notable leaders from both NLC and TUC, appeared optimistic about the forthcoming consultations.

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