LCCI Welcomes Diesel VAT Suspension, Presses for More Support

The Lagos Chamber of Commerce and Industry (LCCI) has expressed its commendation for the recent decision by the Federal Government to temporarily suspend the Value Added Tax (VAT) on diesel.

In a statement released today, Dr. Chinyere Almona, the Director General of the LCCI highlighted its concerns regarding the additional 7.5% diesel tax and its impact on business operations and final consumers.The temporary suspension of VAT on diesel is seen as a positive response to the prevailing economic challenges, she added.

In he words: this move aligns with recent VAT rate adjustments witnessed across European countries, where lower VAT rates on essential commodities such as gas, electricity, and basic supplies were implemented by EU-member states in response to economic difficulties.For instance, in Germany, the VAT rate on natural gas was reduced from 19% to 7% until March 2024, aimed at alleviating the burden of inflation. Belgium made a permanent 6% cut in energy costs, while the Netherlands reduced VAT on natural gas, electricity, and district heating from 21% to 9%. In Ireland, VAT on gas and electricity was temporarily reduced to 9% for six months.

While the LCCI welcomes the temporary VAT suspension on diesel, it remains deeply concerned about the high operating costs that businesses and households are facing due to inflation, high interest rates, and a weakening local currency.

“The Chamber believes that policy measures like this are crucial to kickstart and rejuvenate the economy, particularly benefitting Micro, Small, and Medium Enterprises (MSMEs), as well as the services and manufacturing sectors.

In light of these concerns, the Chamber suggests that the government should consider extending VAT rate reductions to other essential commodities, including energy, fuel, gas prices, and staple food items. This would provide much-needed relief to businesses and consumers during this challenging period of inflation, Almona stressed.

Director General, emphasized the importance of such measures in revitalizing the economy. The statement was issued on October 4, 2023, as the Chamber continues to advocate for policies that promote economic growth and stability.

October 04, 2023