The price at the pump doesn’t have the same origin in Paris as it does in Lagos. In Europe, taxes account for half—or more—of the final price. In Nigeria, fuel prices are shaped largely by the naira’s exchange rate and a long history of subsidies. A comparison that highlights two very different visions of energy taxation.

In Europe, taxes drive the price

In the European Union, taxation weighs heavily. For every liter, drivers first pay a fixed excise duty—around €0.55 on gasoline and €0.45 on diesel on average. Then comes VAT, which applies not only to the pre-tax fuel price but also to the excise itself. The result: in most countries, more than 50% of the pump price is made up of taxes, according to the European Commission’s Weekly Oil Bulletin.

These revenues, both stable and substantial, help finance transport and also send a climate signal. “Energy taxation is a dual tool: fiscal and environmental,” notes one Brussels-based analyst.

In Nigeria, subsidies ended… or did they?

On the other side, Nigeria has long subsidized gasoline, spending billions of dollars each year. In May 2023, the government announced the end of this policy. The shock was immediate: prices soared, inflation followed.

Officially, subsidies are gone. In practice, reports point to implicit support: delayed payments by the national oil company NNPC to importers, unofficial price caps.

As for taxation, the contrast is stark. VAT is 7.5%, but most petroleum products have been exempt since 2024. The result: the direct tax contribution on gasoline is virtually zero. A proposed 5% fossil fuel surcharge has been floated for 2025, but its actual implementation remains unclear.

Two policy logics

Why such divergence? In Europe, excise duties are an accepted instrument: heavily taxing fuel discourages its use and funds the energy transition. In Nigeria—a crude producer and exporter—gasoline is considered a social good. Subsidized yesterday, lightly taxed today, it remains a politically sensitive issue.

“Raising fuel prices is socially explosive. Every reform has to be carefully balanced,” explains a Nigerian economist.

When taxation shapes the bill

The comparison is striking. A French motorist pays about €1.60 per liter of gasoline, nearly one euro of which is taxes. In Lagos, a liter costs around 800 naira (less than one euro), with minimal direct taxation but high vulnerability to exchange rates and government decisions.

In short:

• In Europe, prices are stable but highly taxed.
• In Nigeria, prices are low-taxed but volatile, dependent on markets and politics.

Europe vs. Nigeria: Who Pays What at the Pump?

Europe (EU average)Nigeria (2025)Excise (gasoline)≈ €0.55/lNearly zeroExcise (diesel)≈ €0.45/lNearly zeroVAT~20%7.5%… but exempt for petroleumShare of taxes50–60% of pump priceLow (often <10%)SubsidiesNone (trend: carbon taxation)Officially removed in 2023, but implicit support persistsAverage liter price~ €1.60/l (gasoline)~ ₦800/l (≈ €0.95)Policy logicTax to fund & discourage consumptionMaintain social stability, soften impact on population

Quick takeaway:

• In Europe, fuel is expensive largely because of taxes.
• In Nigeria, taxes are minimal but the price is hostage to imports, currency, and politics.
  
  Methodological Note
  The rates and regimes cited are subject to change. For country-by-country comparisons or precise calculations (e.g., “how much tax is in 1 liter today”), refer to data from the website prix-carburant.eu (comparison of fuel taxes in Europe), current Nigerian regulations (FIRS/JO), and data reported by the press.