The Lagos Chamber of Commerce and Industry (LCCI) has tasked the federal government to extend the waiver of 7.5 per cent Value added Tax (VAT) on diesel to staple food items and other energy-related items so as to mitigate the effect of inflation on businesses and consumers.
Director General, LCCI, Dr. Chinyere Almona, made this call in a released statement while commending the government’s decision on the temporary suspension of VAT on diesel.
“The chamber suggests that to relieve businesses and consumers during this period of debilitating inflation, the government should extend reductions in VAT rates to other energy, fuel, and gas prices as well as staple food items,” she said.
Almona further raised concerns about the additional cost of 7.5 per cent diesel tax on the cost of business operations and its transmission to final consumers.
“LCCI wishes to commend the Federal Government’s decision to suspend the VAT on diesel temporarily. We were particularly concerned about the additional cost of 7.5% diesel tax on business operations and its transmission to final consumers.
“The suspension of VAT temporarily on diesel in response to the current economic challenges is laudable.
“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 micro, small and medium enterprises (MSMEs), services, and manufacturing sectors,” she submitted.