Turning the Corner: A New Compact between Nigeria's People and State
SECURING THE BENEFITS OF CRITICAL REFORM #2: COST-
REFLECTIVE PMS PRICING
KEY RISKS: The
Federation's fiscal position
does not strengthen
despite higher PMS prices,
because the price is still
too low (below cost) or
savings do not flow to the
Federation
KEY BENEFITS:
stabilizes the
fiscal situation
by increasing
net oil revenues
POLICY RECOMMENDATIONS TO FULLY TURN THE CORNER
(A) OIL REVENUES
.
Clarify how prices at the pump are fixed as opposed to market
conditions.
Ensure revenue gains from removal of fuel subsidy materializes.
• Improve transparency of NNPC with regards to profits and oil
revenues to be remitted to the Federation Account.
Even with oil revenue benefits secured, non-oil revenues also
need to be increased
(B) NON-OIL REVENUES
Increase the VAT rate while allowing for input tax credit; remove
exemptions for petrol products
• Introduce green and pro-health taxes
• Rationalize tax expenditures
. Improve tax administration
Adopt a data-driven approach to tax auditing
NIGERIA
THE WORLD BANK
IBRD ⚫IDA | WORLD BANK GROUP
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