Federal Govt To Introduce Fuel Tax When Economy Stabilises, Incomes Improve, Says Oyedele

The federal government will introduce a tax on fuel only when the economy has stabilised and Nigerians’ incomes can absorb it, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said.

Oyedele made the remarks in an interview with Arise TV business correspondent Rotus Odiri on the sidelines of the 2026 International Monetary Fund (IMF) and World Bank annual meetings in Bangkok, Thailand.

Asked whether the government plans to impose a fuel tax, he said taxes make up between 20 and 80 per cent of pump prices in some countries, while many African countries levy six to 10 different taxes on fuel products.

He said introducing the tax while petrol was still subsidised would have defeated its purpose, since the government would have been paying the tax itself. Imposing it immediately after the subsidy was removed, he added, would have piled more pressure on Nigerians.

The minister said suppressing prices has not worked in any country. He said the better approach is to make sure incomes rise faster than prices, which he described as the route to prosperity and a stronger middle class.

“At the appropriate time, when the economy has stabilised, and income level will be able to accommodate it, those taxes will come,” he said, adding that the aim is not to impose taxes for their own sake.

Oyedele said money from the levy would go toward road infrastructure and a fuel reserve to help moderate petroleum product prices in the event of a shock. He said the reserve would also give the government room to suspend the tax temporarily when prices spike.

He said the law bars any such tax from taking effect without a gazette order signed by the finance minister, so it cannot be introduced in secret. He added that the government has no plan to act quietly, and that the reasons and benefits would be made clear to Nigerians when the time comes.

Oyedele also explained how the petrol subsidy removal and foreign exchange reforms were sequenced. He said the government first removed the subsidy on petrol prices and then allowed the naira to adjust gradually, noting that the exchange rate is a major driver of petrol prices.

He said that when the naira weakened to about N1,600 to N1,700 (he said he could not recall the exact level), the government quietly capped the rate to manage the impact on citizens. This, he said, explains why a measure of subsidy persisted in 2023.

According to him, the subsidy was fully removed in October 2023, when support on both the petrol price and foreign exchange ended.