Dr. Chinyere Almona

The Lagos Chamber of Commerce and Industry (LCCI), has described the  federal government’s recent decision to suspend the 7.5%  Value Added Tax (VAT) on diesel for six months as commendable, but expressed concerns over high operating costs of  doing business.

The Chamber, in a statement signed by its Director General, Dr. Chinyere Almona, also urged the federal government to extend such waivers  to other energy, fuel, gas prices and other staple food items, so as to relieve businesses and consumers, during this period of debilitating inflation.

It stated further  that the decision had addressed the fears, earlier expressed by the Chamber, about implications of the additional cost of 7.5% diesel tax, on businesses and the final consumers.

Describing the development as not unusual, the business advocacy group compared the suspension 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,” the Chamber stated.

Expressing its support for the  temporary VAT holdup, the Chamber would however want the federal government to address high operating costs businesses and households face, due to high inflation, high interest rates, and weakening local tender.

LCCI noted that such policy remedies are important to jump-start and revive the economy, particularly the MSMEs, services, and manufacturing sectors.