The debate around the 5% surcharge on fuel has re-emerged as one of the most widely discussed policy issues in recent weeks. For many Nigerians, whether business leaders, corporate directors, or citizens, the concern is not just about whether the surcharge is new, but about what it means for the economy, daily living costs, and wider governance. The facts are clear: this surcharge is not a new creation of the current administration. It has been part of Nigerian law since the Federal Roads Maintenance Agency (Amendment) Act of 2007. What has brought it back into public discourse is its restatement in the new Nigeria Tax Act of 2025, a move intended to harmonise provisions across existing tax laws and enhance transparency. Yet, beyond the legal clarification lies a broader conversation about governance, economic burden, fairness, and trust.
For corporate businesses, the implications of the surcharge cannot be dismissed as a matter of mere legal housekeeping. Directors and business leaders know that changes in tax frameworks, even framed as harmonisation, can significantly affect corporate planning, operational costs, and shareholder value. The 5% surcharge, tied to fuel consumption, has a direct pass-through effect on supply chains, logistics, and overall production costs. When fuel becomes more expensive, transport costs rise, and these increases filter into the prices of goods and services. For businesses already facing inflationary pressures, high borrowing costs, and foreign exchange volatility, any additional cost element demands attention. Boards are left grappling with a familiar dilemma: how to balance compliance and corporate citizenship while protecting competitiveness and shareholder returns.
On the citizen side, the concerns are equally pressing. Nigerians are already contending with rising fuel prices following subsidy removal, and the resulting inflation has placed enormous pressure on household incomes. For many, the difference between a “new tax” and a “restated surcharge” is academic; what matters is the burden on their daily lives. A surcharge that was legally dormant for years is now reintroduced into public consciousness at a time of economic strain. Citizens naturally question whether this is the right moment to revive it, and whether the revenues will actually deliver the intended benefits in the form of better-maintained roads and infrastructure. Without clear evidence of accountability in how similar revenues have been used in the past, trust becomes a major obstacle.
From a governance perspective, the controversy is less about legality and more about credibility. The government has clarified that the surcharge will not automatically take effect in January 2026, when the new tax laws commence. Instead, it will require an order from the Minister of Finance, published in the Official Gazette, to activate it. This safeguard is important, but it also raises the question on why restate a provision now, without simultaneously addressing how revenues will be transparently managed? For directors who adhere to global governance standards, legitimacy is not achieved by legality alone; it requires accountability, fairness, and trust. Citizens and businesses will want assurances that the funds raised will be ring-fenced and reported upon, rather than absorbed into the general revenue pool where tracking is difficult.
The CIoD Nigeria recognises that this issue sits at the intersection of business realities and citizen welfare. On the one hand, improved road infrastructure is in the long-term interest of all stakeholders. Poorly maintained roads increase costs, extend delivery times, damage goods, and contribute to accidents that undermine productivity. In theory, therefore, a dedicated surcharge could be beneficial. On the other hand, implementing it without transparency risks alienating citizens and burdening businesses at a fragile moment in Nigeria’s recovery. This tension, between potential public good and immediate private cost, is at the heart of the debate.
Some argue the surcharge should not be restated until the economy stabilises, while others contend that harmonising tax laws is necessary to modernise Nigeria’s fiscal system. Both views carry weight, and the CIoD believes this is where governance matters most. Decisions of such magnitude must be not only lawful but also legitimate in the eyes of the stakeholders they affect. Legitimacy derives from consultation, accountability, and fairness, not technical explanations alone.
For corporate leaders, the call is clear. Directors must prepare their organisations for potential changes, incorporating tax scenarios into strategy, reviewing supply chains, and engaging shareholders with honest communication about risks. At the same time, directors should advocate for accountability in public policy, insisting that any surcharge revenue be tied directly to measurable outcomes in infrastructure improvement.
For citizens, the key issue remains trust. Nigerians have seen many revenue-generating mechanisms introduced over the years with little visible benefit. Unless this surcharge is managed differently, scepticism will persist. Engagement with civil society, labour unions, and community groups will be essential, alongside regular reporting on revenue use. Anything short of this risks further eroding public confidence.
CIoD Position
As Nigeria’s premier corporate governance institution, the Chartered Institute of Directors (CIoD) Nigeria, we recognise the legal validity of the surcharge and the rationale for harmonisation but also acknowledge the concerns of businesses and citizens about timing and impact. Our position is that implementation must be accompanied by clear communication, stakeholder consultation, and transparent reporting on revenue use. Business leaders must prepare responsibly while also advocating for fairness and accountability. Citizens deserve clarity and evidence that fiscal policies serve their welfare, not merely administrative convenience. Ultimately, governance is about building trust, and only through transparency, fairness, and accountability will this surcharge, if implemented, gain legitimacy and contribute to national development.