The Federal Government has announced that a new 5% petrol consumption tax will take effect from January 2026, sparking fresh concerns over rising living costs.

Under the new law, Nigerians will pay an additional N500 for every N10,000 spent on petrol. According to the government, the levy is aimed at discouraging fossil fuel dependence and promoting cleaner energy alternatives.

Officials explained that the tax will not apply to kerosene, cooking gas, Compressed Natural Gas (CNG), or other eco-friendly fuels. Proceeds from the levy, they said, will be channelled into climate change projects and renewable energy development.

While authorities describe the move as a step toward a greener future, analysts warn it could worsen inflation and push up transport costs across the country. Critics also fear the flat tax rate will hit low-income households the hardest, since fuel price hikes directly affect food and transportation expenses.

For now, many Nigerians remain anxious about the potential impact, questioning whether the long-term environmental benefits can outweigh the immediate economic strain on daily life.