Nigerians have lamented the effects of the introduction of the 7.5 per cent Value-Added Tax on the price of diesel.
This comes barely a month after President Bola Tinubu removed the subsidy on petrol, raising the price of PMS from N188 to about N580 in different states of the federation.
Recall that the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced that the Finance Act 2020 raised the previous five per cent VAT of the country to 7.5 per cent on commodities including automobile gas oil and it was implemented on February 20, 2020.
But the VAT-exempt items include honey, bread, cereals, cooking oils, culinary herbs, fish, flour, starch, fruits, meat, poultry, milk, nuts, pulses, roots, salt, vegetables, water, sanitary pads, tampons, tertiary, secondary, primary and nursery tuition.
While other commodities have been VAT-compliant, diesel was not until recently.
The Federal Government, on Monday, confirmed that it had commenced the implementation of the payment of 7.5 per cent Value Added Tax on Automotive Gas Oil, popularly called diesel.
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Officials of the Nigeria Customs Service and Federal Inland Revenue Service confirmed this in Abuja, stressing that AGO was not exempted from the payment of VAT based on the VAT Modification Order 2021.
The development was, however, condemned by Nigerians, who pointed out that citizens were still trying to adjust to the hike in the pump price of Premium Motor Spirit, popularly called petrol, not knowing that plans had been perfected to further raise payments for diesel.
The spokesperson for the service, Abdullahi Maiwada, when asked by Punch correspondent if the NCS was now collecting 7.5 per cent VAT on the imports of AGO, he replied, “Yes.”
He continued: “If you ask me whether Customs collect 7.5 per cent VAT on AGO, I will tell you yes and I’ll give you the reasons. There’s what we call VAT Modification Order 2021, which exempts petroleum products of Harmonised System Codes.
“But the HS Codes for Petroleum products that are exempted from paying VAT are those in the region of 2709.00.00.00 – 2710.19.12.00. The HS Codes are what we use to classify commodities. But AGO is classified under HS Code 2710.19.21.00, which is not exempted from the payment of VAT. Now, this is based on the VAT Modification Order 2021.”
An official of the FIRS, Tobi Wojuola, also confirmed the development, stressing that it was the position of the VAT Modification Order.
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“The position of the VAT Modification Order 2021 is that VAT is chargeable on diesel.”
However, the new development has hit Nigerians hard, as many have called for an utmost review of it, especially because of the recent removal of fuel subsidies.
A Twitter user, Ingawa said: “That means for every litre of AGO you will buy, you have to pay 7.5 per cent VAT of the pump price. For example; If one litre of AGO is N650 at the filling station, then you have to pay an additional N48.75 being payment for 7.5 per cent VAT. The total price per litre will be N698.75 per litre.”
One user said: “The Citizens will be the main IGR for this government. There is no single move to cut the cost of government from the Senate to the House to other departments.
“They went to education first by trying to add tuition fees, now 7.5 per cent VAT on PMS. Everything directly to the common man.”