Nigeria may soon face renewed debates over taxation after the International Monetary Fund (IMF) recommended the introduction of taxes on fuel products and telecommunications services as part of efforts to strengthen government revenue and improve fiscal stability. The recommendation was contained in the Fund’s 2026 Article IV Consultation report, which outlined several measures aimed at helping Africa’s largest economy generate more funds for development projects and social welfare programmes.
According to the IMF, Nigeria’s recent tax reforms are a positive step, but additional measures will be required over the medium term to meet growing spending needs. The Fund suggested increasing the Value Added Tax (VAT) rate, extending VAT to fuel products, introducing excise duties on telecommunications services, and reducing certain tax exemptions. It argued that these changes, combined with improved tax administration, could significantly expand government revenue and create more fiscal space for critical investments.
Despite its recommendations, the IMF acknowledged the economic realities facing millions of Nigerians. The organisation warned that any new tax measures should be introduced cautiously, considering the country’s rising poverty levels and worsening food insecurity. It stressed that social protection mechanisms, including an effective and adequately funded cash transfer programme, must be in place before implementing reforms that could increase living costs for vulnerable households.
The proposal is expected to spark strong reactions from both consumers and industry stakeholders. Telecommunications operators have consistently opposed additional taxes, arguing that the sector is already struggling with rising operating costs, foreign exchange pressures, multiple taxation, and infrastructure challenges. Industry leaders have repeatedly warned that new levies could lead to higher call and data charges for subscribers. Similarly, fuel-related taxes remain a sensitive issue following the removal of petrol subsidies, which contributed to higher transportation costs and inflationary pressures across the country.
The IMF believes that stronger revenue mobilisation is essential to securing Nigeria’s long-term fiscal health. The Fund estimates that revenue-enhancing policies could generate an additional 3.9 per cent of GDP within three years, while administrative reforms such as electronic invoicing, improved compliance systems, and expanded taxpayer registration could add another 3.1 per cent. Overall, the IMF projects that a combination of tax reforms and administrative improvements could increase government revenue by 4.6 per cent of GDP over the medium term, providing much-needed support for public spending and economic development.
source: punch