SEREC Warns Against IMF-Backed VAT on Fuel, Telecom Excise in Nigeria

BY KESIENNA SHEPHERDS

The Sea Empowerment and Research Center (SEREC) has raised strong concerns over recent recommendations by the International Monetary Fund (IMF) urging Nigeria to extend Value Added Tax (VAT) to petroleum products and introduce excise duties on telecommunications services.

In its position paper released on June 15, 2026, SEREC cautioned that while revenue generation is critical for fiscal stability, such tax measures could worsen Nigeria’s already fragile socio-economic conditions.

Nigeria is currently grappling with inflation, declining purchasing power, rising energy costs, unemployment, food insecurity, and escalating transportation expenses. According to SEREC, imposing VAT on fuel would ripple across transportation, logistics, agriculture, and manufacturing, leading to higher fares, food prices, and production costs.

Telecommunications, now considered essential infrastructure, would also be hit hard. Excise duties on voice and data services could widen the digital divide, undermine Nigeria’s digital economy ambitions, and burden consumers already facing multiple taxation in the sector.

SEREC argued that the proposed taxes may yield limited welfare gains compared to their broader economic consequences. The maritime and logistics sectors, vital for trade and growth, would face additional cost pressures, potentially weakening Nigeria’s competitiveness in regional and global markets, the Centre further noted.

Instead of new consumption taxes, SEREC urged the government to focus on alternatives such as strengthening tax administration, expanding the tax net, reducing governance costs, tackling corruption, modernizing customs operations, and leveraging opportunities in the blue economy.

The Center emphasized that reforms must balance fiscal sustainability with social stability, warning that revenue generation should not come at the expense of worsening poverty and shrinking household incomes.

“Policies that stimulate production, support enterprise growth, encourage investment, expand employment opportunities, and strengthen citizens’ purchasing power should take precedence over additional consumption taxes,” the paper stated.

SEREC concluded by calling for evidence-based, people-centered approaches to tax reform, stressing that any proposals should undergo socio-economic impact assessments and stakeholder consultations before implementation.