Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele has said President Bola Tinubu plans to tax fuel when the country’s economy and income level stabilises.
While appearing on AriseTV, Mr Oyedele said the country’s decision on fuel subsidy was tied to election, adding that national governance and economic management should not be frozen for elections.
“But the point is that the removal of subsidy was actually done in a very strategic manner. Many people haven’t paid attention to it. You will notice that the first thing Mr President said on day one that the subsidy is gone,” he said.
He said the subsidy Mr Tinubu removed was on fuel, noting that there was a foreign-currency subsidy before its removal.
The minister said the naira floated after about two weeks, adding that the flotation never happened overnight but repriced gradually from 460 to 500.
“The biggest factor for the fuel price is exchange rates. That repricing of the naira was reflecting on pump prices gradually, and when it got to a point, the naira was N1,800 to N1,900. I can’t remember where it got to.
“Government had to put a lead on it without announcing it. That is the reason why people say there was still a bit of subsidy in 2023 or something like that. It was to manage that process because you need to be mindful of the impact on the people,” the minister said.
According to him, in October 2023, when it was completely removed, there was no longer a subsidy on FX and fuel prices, and the market determined it.
Mr Oyedele explained that when the government was subsidising it, it never made sense to put tax, as the government would also pay the tax itself, adding that one can’t remove subsidy and impose taxes.
“That’s how you bring prosperity and grow the middle class. And that’s exactly what we are doing as led by Mr President himself. So at the appropriate time when the economy has stabilised, and the income level would be able to accommodate it, then those taxes will come,” he said.
He added that the amounts generated from taxes would be dedicated to road infrastructure and building fuel reserves to moderate fuel prices.
The planned fuel tax comes amid ongoing debate over the federal government’s petroleum pricing policies following the removal of the petrol subsidy in May 2023 by Mr Tinubu.
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