The Lagos Chamber of Commerce and Industry (LCCI) has commended the decision of the Federal Government to temporarily suspend Value Added Tax (VAT) on diesel. The direct general of the LCCI Dr. Chinyere Almona in a Media statement disclosed that the Chambers had concerns about the additional 7.5% diesel tax and its impact on businesses and consumers.
According to her, the suspension of VAT on diesel is a positive step to mitigate the economic challenges, and it draws parallels with recent VAT rate adjustments in European countries.
“This is comparable to recent VAT rate adjustments across European countries where lower VAT rates on gas, electricity and basic supplies were implemented by EU-member states in response to economic challenges. For example, in Germany, to ease the burden of inflation, the VAT rate was reduced on natural gas from 19% to 7% until March 2024. Also, Belgium cut down energy costs permanently by 6%, while the Netherlands reduced VAT on natural gas, electricity, and district heating from 21% to 9%. In Ireland, VAT on gas and electricity is reduced to 9% for six months.
“While the Chamber supports the temporary VAT holdup, it is, however, deeply worried about the high operating costs businesses and households face due to high inflation, high interest rates, and weakening local tender. Policy remedies like this are important to jump-start/ revive the economy, particularly the MSMEs, services, and manufacturing sectors.”
She urged the Federal Government to extend reductions in VAT rates to other energy, fuel, and gas prices as well as staple food items as it would go a long way relieving businesses and consumers during this challenging period.