IMF’s Telecom, Fuel Tax Proposals Could Worsen Nigeria’s Inflation, Group Warns

By Benson Daniel

A policy advocacy group has cautioned that proposals by the International Monetary Fund (IMF) to introduce additional taxes on telecommunications services and fuel could intensify inflationary pressures in Nigeria and further increase the cost of living for households and businesses.

The group argued that implementing new taxes on two of the country’s most critical sectors would likely result in higher operating costs for businesses, increased transportation expenses and more expensive telecommunications services. It noted that such developments could trigger fresh price increases across multiple sectors of the economy, further reducing consumers’ purchasing power.

According to the group, Nigeria is still grappling with elevated inflation, rising food prices and high energy costs, making the introduction of additional tax measures potentially counterproductive. It urged policymakers to carefully assess the broader economic implications of any new fiscal measures before implementation.

Analysts observed that the telecommunications sector has become a key driver of economic growth, digital innovation and financial inclusion, while fuel remains an essential input for transportation, manufacturing and power generation. Any increase in taxes affecting these sectors, they said, could have widespread ripple effects throughout the economy.

The group also called on the Federal Government to prioritise policies that expand the tax base, improve tax compliance and strengthen revenue collection rather than increasing tax burdens on businesses and consumers. It maintained that improving efficiency in tax administration would generate sustainable revenue without placing additional pressure on economic activities.

Economic experts believe that while fiscal reforms are necessary to strengthen public finances, they should be designed in a way that supports investment, protects vulnerable households and encourages private sector growth. They stressed that balancing revenue generation with economic stability remains critical to sustaining Nigeria’s recovery and attracting investment.

The warning comes as the government continues to pursue economic reforms aimed at improving fiscal sustainability and boosting non-oil revenue. Stakeholders have urged authorities to adopt a consultative approach to tax policy, ensuring that reforms promote long-term economic growth while minimising inflationary risks and protecting the competitiveness of key sectors.