The leadership of Trade Union Congress (TUC) has rejected the Federal Government’s planned 5 per cent tax on petroleum products, describing the proposal as “reckless and an act of economic wickedness”.

The Congress warned the government to withdraw the proposal within 14 days starting from today, saying it would not have any other option than to shut down critical sectors in the country if the government failed to do so.

Festus Osifo and Nuhu Toro, President and General Secretary of TUC respectively, in a statement they jointly signed, explained that Nigerians are already overburdened with different taxes.

Outcry over new tax

Daily Trust reports that there has been an outcry over the introduction of the five per cent fuel surcharge in the new tax laws taking effect in January 2026.

With the new tax, Nigerians buying premium motor spirit (PMS) also known as petrol will pay additional N45 for each litre of fuel they purchase if the price remains unchanged at the rate of N900.

The five per cent surcharge on refined petroleum products is contained in the Nigeria Tax Administration Act, one of four tax reform bills signed into law by President Bola Tinubu on June 26, 2025 with implementation slated for January 2026.

The policy targets fossil fuel products provided or produced in Nigeria.

Daily Trust reports that Fossil fuel products include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas, among others. They are derived from the processing of fossil fuels such as coal, petroleum, and natural gas.

However, items exempted from the new tax are clean or renewable energy products, as well as household kerosene, cooking gas, and Compressed Natural Gas.

According to the law, the surcharge will be imposed on all “chargeable fossil fuel products” and will be calculated based on the retail price of the product. The Act stipulates that the surcharge will apply to a “chargeable transaction” such as the supply, sale, or payment for the product, “whichever occurs first”.

The law read in part, “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.

“(1) For the purpose of imposing a surcharge on fossil fuel products, the chargeable transaction shall be the supply, sale, or payment, whichever occurs first. (2) Surcharge shall be computed based on the retail price of all chargeable fossil fuel products.”

The implementation date, however, remains undecided and is now subject to the approval of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. “The minister may, by an Order issued in the Official Gazette, indicate the effective date of commencement of the administration of the surcharge on fossil fuel products under this Chapter,” the Act said.

“The Service shall administer and collect the surcharge every month and may issue regulations for its administration,” a section of the Act reads. A surcharge is an additional fee or tax added to the price of a good or service beyond the base price.

The law tasks the Federal Inland Revenue Service, which will be renamed the Nigeria Revenue Service by 2026, with administering and collecting the surcharge every month. It also empowers the agency to issue further regulations for effective implementation.

It further stated, “The surcharge under this Chapter shall not apply to the following fossil fuel products: (a) clean or renewable energy products; (b) household kerosene; (c) cooking gas; and (d) Compressed Natural Gas.

“(2) For the purpose of this section, ‘clean or renewable energy’ means energy from solar, wind, hydropower, geothermal, or plant and animal waste, which are naturally replenishing, produce little or no environmental pollution or greenhouse gas emissions, and do not deplete over time.”

Opposition has continued to mount over the new provision amidst the inflationary pressure and cost of living crisis triggered by the increase in fuel price following the removal of subsidy from PMS in 2023.

However, labour leaders, who described the new tax as unacceptable, argued that Nigerians cannot be used as sacrificial lambs again, declaring that all the affiliates of the Congress are on standby.

They said, “This reckless proposal is nothing but an act of economic wickedness against already overburdened Nigerians.

“Let it be clear: workers and citizens are still reeling from the pains of subsidy removal, skyrocketing fuel prices, food inflation, and a collapsing naira.

“To now introduce another levy on petroleum products is to deliberately compound suffering, cripple businesses, and push millions of citizens deeper into poverty.

“Government cannot continue to use Nigerians as sacrificial lambs for its economic experiments. Instead of offering relief, jobs, and solutions, it has chosen to further squeeze citizens dry. This is unacceptable!

“The TUC, hereby, urges the Federal Government to immediately stop this anti-people’s plan in its entirety. Failure to do so will leave us with no option but to mobilize Nigerian workers and the masses for a total nationwide resistance.”

Vowing to resist the implementation of the tax, the Congress added, “Strike action is firmly on the table if the government dares to ignore this warning and go ahead to implement this policy.

“Accordingly, the TUC directs all its state councils, affiliates, and structures nationwide to remain vigilant, watchful and wait for further communication that may cumulate into a decisive action should the government dare to further ignore the collective will of the people.

“We also call on our allies, civil society organizations, professional bodies, student unions, market associations, faith leaders, and all patriotic Nigerians to stand in solidarity with us in this struggle.

“Together, we must resist policies that seek to further impoverish citizens and mortgage our future. Enough is enough. Nigerians deserve economic justice, not endless punishment.”

A few days ago, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms defended the surcharge, saying it is implemented at a higher rate in over 150 countries.

In a social media post he made after Daily Trust’s explainer on the policy, Oyedele said the surcharge is a mechanism to create a dedicated pool of funds for building and maintaining roads and related facilities across the country.

He said road infrastructure has suffered from years of inadequate funding which has resulted in unsafe travel conditions, delays, higher logistics costs and increased vehicle maintenance burdens on citizens and businesses.

“This is not a new tax introduced by the current administration. It does not take effect automatically but will only commence when the Minister of Finance issues an order published in the Official Gazette as required under Chapter 7 of the Nigeria Tax Act, 2025. This safeguard ensures careful consideration of timing and economic conditions before implementation,” he stated in the post.

He added that the approach mirrors global practice, stating that more than 150 countries impose fuel related charges ranging between 20 and 80 percent to secure sustainable investment in road infrastructure, improve safety and reduce travel time and cost.

According to Oyedele, the provision has existed since the Federal Roads Maintenance Agency Amendment Act of 2007.

“Its inclusion in the newly passed Nigeria Tax Act, 2025, was done for harmonisation and transparency and to provide a clear legal basis whenever implementation becomes necessary.”

He explained that while savings from petrol subsidy removal can support road projects, they are not sufficient to meet Nigeria’s large and recurring infrastructure needs alongside other fiscal obligations.

A dedicated fund, he said, ensures reliability and predictability in financing so that roads are not left underfunded.

Responding to concerns that the measure contradicts the drive to reduce the tax burden on citizens and small businesses, Chairman of the committee pointed out that several charges have already been removed or suspended.

He listed such as value added tax on fuel, excise duty on telecommunications services and the cybersecurity levy, among others, as part of efforts to simplify the system and cut duplication.

He said the surcharge was moved out of the FERMA Act and integrated into the new tax framework to create a forward looking and coherent legal structure for sustainable road financing and for tackling related challenges such as climate impacts on transport infrastructure.

He also clarified the technicality in the law which states that a fossil fuel product becomes chargeable at the earliest occurrence of supply, sale or payment.

“In summary, the surcharge is not new, not immediate and selectively applied. Its restatement is about transparency, preparedness and sustainable funding for roads and other critical infrastructure, not about sudden implementation.”