SEREC cautions Nigeria against IMF’s tax advice on petroleum, telecom

The Sea Empowerment and Research Center (SEREC) has cautioned the Federal Government of Nigeria against policy actions that could further aggravate the already fragile socio-economic conditions facing millions of Nigerians.

The SEREC caution came following the review of the impact of the recent advice by the International Monetary Fund (IMF) urging the Federal Government of Nigeria to extending Value Added Tax (VAT) to petroleum products and introducing excise duties on telecommunications services as part of broader fiscal reforms aimed at increasing government revenue.

The recommendation forms part of the IMF’s 2026 Article IV Consultation Report on Nigeria.

SEREC recognized the necessity for governments to improve revenue generation, reduce fiscal deficits, and finance critical infrastructure and social services,  but the timing of the advice was wrong as the country is presently grappling with severe inflammation pressures.

According to the research centre, “Nigeria is presently grappling with severe inflationary pressures, declining purchasing power, exchange rate volatility, rising energy costs, unemployment, food insecurity, and escalating transportation expenses. Under these prevailing circumstances, any additional tax burden on fuel products and telecommunications services risks producing significant adverse multiplier effects across the economy.

“Petroleum products remain a fundamental input in Nigeria’s transportation, logistics, manufacturing, agricultural, maritime, and distribution value chains. Consequently, imposing VAT on fuel would inevitably increase operating costs across virtually every productive sector. The resultant effect would be higher transportation fares, increased food prices, elevated logistics costs, and further inflationary pressures on already overstretched households.

“Similarly, telecommunications services have evolved from luxury consumption to critical economic infrastructure. Access to voice services, internet connectivity, mobile banking, digital commerce, education, and public services increasingly depends on affordable telecommunications access. Additional excise duties on the sector would likely be transferred to consumers through higher tariffs for voice and data services, thereby widening the digital divide and undermining Nigeria’s digital economy aspirations. Industry stakeholders have repeatedly warned that the sector already faces multiple taxation burdens.

“We are particularly concerned that the proposed taxes may generate limited net welfare gains when weighed against their broader economic consequences. Tax policies that suppress consumption, reduce business competitiveness, and increase production costs may ultimately erode the very economic activities from which government seeks to derive sustainable revenues.

“Furthermore, the maritime and logistics sectors—which serve as critical enablers of trade and economic growth—would face additional operational cost pressures. Higher fuel costs directly impact freight rates, cargo evacuation expenses, inland transportation charges, port operations, and supply chain efficiency. Such developments could adversely affect Nigeria’s trade competitiveness at a time when the nation seeks to expand exports, deepen regional trade integration, and strengthen non-oil revenue sources.”

The centre therefore enjoined the government to prioritize the following strategic alternatives:

Strengthening tax administration and plugging revenue leakages across government agencies.

Expanding the tax net rather than increasing the burden on already compliant taxpayers.

Accelerating reforms that improve productivity, industrial output, and economic growth.

Reducing the cost of governance and eliminating wasteful public expenditure.

Intensifying anti-corruption measures and enhancing transparency in public finance management.

Supporting to Improve the ongoing efficiency and modernization drives in customs administration, improving port operations, and boosting IT tools for ease of business and coordinating trade facilitation to unlock greater non-oil revenue opportunities.

Deepening local content participation in strategic sectors, including maritime transport, logistics, energy, manufacturing, and the digital economy.

Leveraging the blue economy, maritime trade, and indigenous shipping development as sustainable revenue-generating alternatives.

SEREC further recommended that any future tax reform proposals should be subjected to comprehensive socio-economic impact assessments, stakeholder consultations, and measurable poverty-impact evaluations before implementation.