LCCI commends FG on suspension of VAT on diesel, calls for extension to food items

By Tajudeen Balogun 

The Lagos Chamber of Commerce and Industry (LCCI) has commended the Federal Government FG’s decision to suspend the VAT on diesel temporarily, calling for extension of the gesture to other energy, fuel and gas prices as well as staple food items.

Still, it said it is concerned about the additional cost of 7.5 percent diesel tax on business operations and its transmission to final consumers.

Following the latest move, the Chamber suggested 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.

LCCI made this known in a press statement signed by its Director General, Dr Chinyere Almona 

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The suspension of VAT temporarily on diesel in response to the current economic challenges, the Chamber restated is laudable, adding that it 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. 

It cited an example, in Germany, with respect to ease the burden of inflation, where 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” Almona added.

LCCI Director General noted that 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. 

She affirmed that policy remedies like this are important to jump-start/revive the economy, particularly the MSMEs, services and manufacturing sectors.