Many Nigerians have described the first 22 days of President Bola Ahmed Tinubu’s administration as ‘bitter-sweet.’
His quick decisions, lauded by many as “bold,” “decisive,” and “correct,” are not without consequences that are grim and arduous for the average Nigerian.
For example, since the removal of fuel subsidies, the price of Premium Motor Spirit (PMS) has skyrocketed. There has recently been speculation about an impending Value Added Tax (VAT) on PMS. A planned increase in electricity tariffs on July 1 has further agitated Nigerians.
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The news comes as Nigerians grapple with the harsh economic realities brought on by the elimination of fuel subsidies.
Kelvin Odanz and Daniel Regha, two popular social media influencers, summed up the sentiment of the majority of Nigerians.
“The fuel subsidy has been eliminated; the education subsidy has been eliminated; and a VAT on diesel has been implemented, which will raise its price and affect the cost of goods on the market.” The electricity subsidy is about to expire. All of this in one month. Too quickly. Far too much. Nigerians are in pain. On Monday, Kelvin Odanz tweeted, “We are being suffocated.”
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Daniel Regha stated unequivocally that the current government’s policies were unfavourable to the masses.
“It should not be news that Tinubu met Bill Gates and Aliko Dangote in the presidential villa. The visit is making headlines, but what has this administration done to benefit the general public? From the elimination of fuel subsidies to the rumoured increase in electricity tariffs. “It’s never about us,” he tweeted on Monday.
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Nigerians are particularly concerned about the rumoured tax on PMS, fearful of further economic woes that could drive up inflation.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), explained the nitty gritty of President Muhammadu Buhari’s previous administration’s 7.5% VAT in an exclusive interview with Ejes Gist News on Monday.
“The previous administration’s VAT Modification Order 2021 limited VAT exemption on petroleum products to aviation turbine kerosene, PMS, household kerosene, locally produced liquefied petroleum gas and crude petroleum oils.” This effectively means that only diesel is subject to 7.5% VAT, which the authority appears to be implementing,” he explained.
Because of the increase in inflation to 22.41 percent in May, he advised President Tinubu to consider eliminating VAT on diesel to reduce the negative impact on manufacturers and the manufacturing sector.
“Given the upward pressure on inflation as a result of the removal of the PMS subsidy, the government should consider suspending the VAT on diesel to avoid further fueling inflation and compounding the burden on individuals and businesses, particularly manufacturers who rely on diesel to power their factories,” he said.
The manufacturing sector is already being harmed, according to Idakolo Gbolade, Chief Executive Officer of SD & D Capital Management. Any other tax, he said, would be insensitive to Nigerians at this time.
“We know that the previous government implemented a 7.5% tax on AGO; the news of a 7.5% tax on PMS has not been confirmed,” he said. However, the AGO tax has had an impact on the activity of manufacturers, particularly those who use their resources to generate power for the operation of their plants, and has significantly increased the cost of doing business. Any other tax, if enacted, would be unacceptable to Nigerians at this time. We are all aware that the new government may intend to raise revenue through various taxes, but if implemented now, this particular [PMS] tax will be insensitive.”
Prof Godwin Oyedokun is among those who have urged President Tinubu to implement palliatives to mitigate the effects of his various economic policies.
“However, the effect will be temporary,” said the accounting and financial development don of Lead City University, Ibadan. The pain will be temporary, but it will benefit the majority of Nigerians in the long run.”
Gbolade expressed a similar sense of optimism, saying, “In all of these, I see Nigeria gaining strength with a strong and competitive economy in a very short period.”
