More hardship coming as FG pushes revenue drive, targets N1trn from tax 

The Federal Government is doubling down on its aggressive revenue drive despite its negative effects on hapless and already impoverished citizens.

Business Hallmark reliably gathered that the government is putting finishing touches to modalities that will help facilitate the successful take-off of the newly introduced 5% surcharge on locally produced and imported petroleum products.

The 5% refined petroleum levy is part of the Tax Administration Act, one of the four tax reform bills signed into law by President Bola Tinubu on June 26, 2025.

According to the act, a copy seen by our correspondent, the levy applies to all chargeable transactions, including supply, sale, or payment, based on the retail price of the product.

“A surcharge is imposed at five per cent on chargeable fossil fuel products provided, or produced, in Nigeria, and shall be collected at the time a chargeable transaction occurs,” the newly signed Act stated.

Aimed at boosting non-oil revenue and ensuring fiscal sustainability, the levy will be applied to all fossil fuel products such as diesel, petrol, and aviation fuel.

Decline in Consumption

However, household kerosene used for cooking by poor Nigerians, Liquefied Petroleum Gas (cooking gas), and Compressed Natural Gas (CNG) would be exempted from the levy.

On Wednesday, August 13, 2025, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), announced a decline in Nigeria’s fuel consumption for June 2025, with total fuel evacuation dropping to 1.44 billion litres.

According to NMDPRA’s Director of Public Affairs, George Ene-Ita, daily local fuel consumption had averaged 48 million litres.

The figure represents a daily average evacuation of 48,025,604 litres (made up of Household Kerosene (HHK), Automobile Gas Oil (Diesel), and Premium Motor Spirit (Petrol), which is obtained by dividing the total monthly volume by the 30 days in the month of June.

Based on the combined average price of each of the three products at N1,100, this totals N1.584 trillion monthly, and N19.008 trillion revenue annually.

As a result, the newly introduced 5% refined petroleum products tax will fetch the government N79.2 billion monthly, and N950.4 billion annually.

This figure is a conservative estimate as tax revenues from refined petroleum products are expected to be higher since other fossil fuels like LNG and CNG are not captured in the calculation.

BH findings at the weekend showed that the Federal Government earned about N21.22 trillion as revenue from the activities of five revenue-generating agencies, Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Mines and Steel Development in the first six months of 2025.

According to the financial reports of the five government ministry,  agencies, and parastatals  submitted to the Federation Accounts Allocation Committee (FAAC) early this month obtained by our correspondent, FIRS topped the chart with the collection of N13.76 trillion in the first six months of 2025.

Following closely on the heels of the tax collection agency is NUPRC, which raked in the sum of N5.21 trillion in oil royalties.

Coming third is the Nigeria Customs Service (NCS), which earned N2.02 trillion for the nation through duties and levies on imported goods.

In fourth position is NNPCL. While the corporation claimed in its monthly report that it remitted N6.96 trillion in statutory payments to the federation account between January and June 2025, figures it submitted to FAAC reflects only N197.8 billion earnings in the period under review.

The last MDA on the list of contributors, the Ministry of Mines and Steel Development supervised by former Lagos State Commissioner for Information and Strategy, Mr. Dele Alake, contributed N32.39 billion to the national treasury.

More Hardship for Nigerians

The government, sources informed BH, was able to achieve this feat as a result of its aggressive revenue collection strategies, tightening of enforcement measures and by widening the tax net to cover those not covered before.

However, while the government is making more money, Nigerians are reeling under the effects of the levies.

Checks by BH showed that Nigerians had grappled with a steep hike in the prices of basic services as well as higher taxes in the last three years like never before.

For instance, the price of a unit of  energy (electricity) has gone up from between N21 to N36 to between N50 and N205, depending on the tariff band.

Also, the average pump price of a litre of petrol in Nigeria jumped from  N255 in May 2023 to an average of N1,200.

Government also introduced sugar taxes on beverages produced by bottling/brewing companies and levies on telecommunications companies.

Prices of several other products and services, especially those offered by government-owned institutions like universities, hospitals, immigration service, vehicle licensing agencies, and many others experienced upward swing.

As a result, inflation rate climbed to a 28-year high of 34.19% in annual terms in June 2024, before easing to its current rate of 21.88% in July 2025.

Reacting to the new 5% refined petroleum products tax, stakeholders, including financial experts, oil marketers and consumers criticized it, warning that it might worsen the hardship in the land.

Voicing their opposition to the new levy, oil marketers warned that it will increase pump prices of refined petroleum products.

According to the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Chinedu Ukadike, the surcharge would likely be factored into pre-pricing models by refineries and marketers, and indirectly passed on to consumers.

“The policy will definitely affect pump prices. Our association is closely watching how it will be implemented”, Chief Ukadike stated.

Also speaking, the Association of Nigerian Refineries Petroleum Marketers (ANRPM), warned that the five per cent levy could cause major disruptions to consumers and the petroleum industry, unless matched with regulatory safeguards.

The Chairman of the Board of Trustees of ANRPM, Usman Ali, while lending the association’s conditional support for the levy, advised that revenue from it should be deployed to building infrastructures like roads.

He, however, warned of growing public discontent, especially as the new levy is coming after the removal of fuel subsidies.