In a bold policy shift aimed at easing the financial strain on ordinary Nigerians, President Bola Ahmed Tinubu has announced the removal of Value Added Tax (VAT) on key goods and services that directly impact everyday life. Effective immediately, items such as house rent, public transportation, and renewable energy components will enjoy a 0% VAT rate.
The announcement was made as part of Tinubu’s address marking his second year in office. The president underscored that the decision is part of a comprehensive fiscal reform agenda designed to promote fairness, boost household income, and stimulate growth in critical sectors of the economy.
“Today, I am proud to announce that we are implementing a 0% VAT policy on essential goods and services rent, public transport, and renewable energy solutions,” Tinubu said. “This is more than just a policy. It is a statement of our commitment to economic justice and social support.”
The new tax measure comes amid rising concerns over the cost of living and inflationary pressures across the country. By removing VAT from items frequently used by low- and middle-income households, the administration hopes to create room for more spending, boost productivity, and reduce poverty.
President Tinubu also revealed that the country’s tax-to-GDP ratio, a key indicator of how efficiently a country collects taxes relative to its economic output, has improved from 10% to over 13.5% by the end of 2024. He attributed this improvement to better tax collection systems and more equitable taxation policies, signaling that reforms are already yielding results.
The tax reforms are not limited to VAT exemptions alone. The president outlined additional strategies aimed at simplifying Nigeria’s complex tax environment. Among them is the elimination of multiple taxation, which has long been a major complaint among small and medium-sized enterprises (SMEs). The government plans to streamline tax obligations to encourage the growth of businesses and attract investment.
Furthermore, Tinubu announced that targeted tax incentives will be rolled out to bolster the manufacturing, agriculture, and technology sectors areas he described as “engines of economic transformation.”
To ensure that the reforms are implemented transparently and that taxpayers especially those from vulnerable communities are not unfairly treated, the government will establish a Tax Ombudsman. This independent body will serve as a watchdog, protecting citizens’ rights and providing redress in cases of tax-related grievances.
Another major highlight of the president’s address was the unveiling of a new national fiscal policy framework. This policy is designed to guide how the government manages taxation, public expenditure, and debt. According to Tinubu, it will enforce accountability, encourage inclusive economic planning, and ensure that national resources are equitably shared.
“We are charting a course that places people at the center of our fiscal decision-making,” the president stated. “By removing VAT on essentials and implementing smarter tax policies, we are building an economy that works for everyone.”
The move has been praised by policy analysts and civil society groups, many of whom view it as a welcome relief for millions of Nigerians struggling with high living costs.
