IMF recommends fuel and telecom taxes for Nigeria to boost revenue

The International Monetary Fund IMF has suggested that Nigeria implement taxes on fuel products and telecommunications services to increase government revenue and create fiscal space for development and social programs. This recommendation is part of the IMF’s 2026 Article IV Consultation report on Nigeria, which indicates that additional tax measures will be necessary over the medium term, even after recent tax system overhauls. The IMF proposed increasing the VAT rate, extending VAT to fuel products, rationalizing tax exemptions, and introducing telecom excises to complement administrative improvements. However, the Washington-based institution cautioned that the timing of new taxes must consider Nigeria's rising poverty and food insecurity, ensuring that a cash transfer system is in place and funded. This proposal is expected to generate debate due to sensitivities surrounding fuel prices and telecommunications costs. Previous attempts to introduce a five percent excise duty on telecom services faced significant opposition and were ultimately scrapped. Similarly, fuel taxation proposals have met resistance from labor unions and private sector groups due to concerns about rising living costs. The IMF projects that stronger revenue mobilization efforts are needed to sustain planned increases in public spending and support vulnerable households. Revenue-enhancing tax policies could generate an additional 3.9 percent of Gross Domestic Product GDP within three years. A two-perc