Finance Act 2019: 20 Basic Food Items And Sanitary Pads Make VAT Exemption List

 

 

In a bid to ensure that the cost of living does not rise for Nigerians because of the changes in the Value-Added Tax, several basic food items, locally manufactured sanitary towels, pads and tuition relating to nursery, primary, secondary and tertiary education have been added to the exemption list of goods and services on the VAT under the Finance Bill 2019, signed by President Muhammadu Buhari last week, on the 13th January 2020.

This is according to a statement by Laolu Akande the Senior Special Assistant to the President on Media and Publicity Office of the Vice President.

In his statement on Sunday, Professor Osinbajo said amongst other benefits, the law will consolidate efforts already made in creating the enabling environment for improved private sector participation and contribution to the economy as well as boost states’ revenues.

Professor Osinbajo also noted that according to the President, “the Finance Bill will support the funding and implementation of the 2020 Budget. We shall sustain this tradition by ensuring that subsequent budgets are also accompanied by a Finance Bill.”

Below is a breakdown of the Finance Bill as detailed in Mr Laolu’s communique.

The Finance Bill, 2019 was submitted to the National Assembly by President Muhammadu Buhari alongside the 2020 Appropriation Bill, and signed into law by the President on January 13, 2020.

The Bill, now an Act, has the following objectives:

Promoting fiscal equity by mitigating instances of regressive taxation;
Reforming domestic tax laws to align with global best practices;
Introducing tax incentives for investments in infrastructure and capital markets;
Supporting Micro, Small and Medium-sized businesses in line with the administration’s Ease of Doing Business Reforms;
Raising Revenues for Federal, State and Local Governments.

FACTSHEET ON NEW FINANCE ACT 2019

The new Act is the first legislation created to accompany an Appropriation Act since the return of democracy in 1999.

The new Act raises VAT from 5% to 7.5%.

To allay fears that low-income persons and companies will be marginalized by the new law, reduce the burden of taxation on vulnerable segments, and promote equitable taxation, the Finance Act 2019 has extended the list of goods and services exempted from VAT. The additional exemptions include the following:

Basic food items – Additives (honey), bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits (fresh or dried), live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water (natural water and table water)

Locally manufactured sanitary towels, pads or tampons.

Services rendered by microfinance banks

Tuition relating to nursery, primary, secondary and tertiary education.
Nigeria’s increased new VAT rate of 7.5% is still the lowest in Africa, and one of the lowest anywhere in the world. (South Africa VAT: 15%; Ghana: 12.5%; Kenya: 16%; Egypt: 14%; Rwanda: 18%; Senegal: 18%)

Under Nigeria’s revenue sharing formula, 85% of collected VAT goes to States and Local Governments. This means that the bulk of additional VAT revenues accruing from the increase will go towards enabling States and Local Governments meet their obligations to citizens, including the new minimum wage as already noted by State Governors. Before now, the Buhari administration had firmly resisted previous suggestions to raise VAT.
The new Finance Act exempts Businesses with turnover below 25 million from VAT payments.

Companies Income Tax (CIT)

Under the new law small companies – companies with less than N25 million in annual turnover are charged Zero CIT.

CIT for Companies with revenues between N25 and N100m (described in the Act as “medium-sized” companies) has been reduced from 30% to 20%

Large companies – with annual turnover greater than N100m – will continue to pay the standard 30% CIT

The new Act includes a provision that grants to all companies “engaged in agricultural production” in Nigeria “an initial tax-free period of five years”, renewable for an additional three years.

The new Act also provides incentives to promote tax compliance through bonus reductions in CIT for early remittance:
*2% bonus for medium-size companies
*1% bonus for other companies.

Personal Income Tax Act

The new Act now includes “electronic mail” as an acceptable form of correspondence for persons disputing assessments by the Tax Authorities.

Contributions to Pension and Retirement Funds, Societies and Schemes are now unconditionally tax-deductible.

Stamp Duty Act

With the new Act, the N50 Stamp duty charge is now applicable only to transactions amounting to N10, 000 and above, a significant increase on the former threshold of N1,000.

The new Act also expands the list of items exempted from stamp duty.

Customs and Excise Tariff

To reduce unfair advantages previously conferred on imported goods at the expense of locally manufactured ones, certain imported goods are now subject to excise duties similar to locally manufactured goods.

VAT Increase Takes Effect From February 1, FG Tells Nigerians

 

The Federal Government has said that the increase in Value Added Tax (VAT) from 5 to 7.5 percent will take effect from February 1, 2020.

This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed on Thursday, during the inauguration of the Chairman and Board members of the Federal Inland Revenue Service (FIRS) in Abuja.

READ ALSO: It’s Official! Nigerians To Pay 7.5 Percent Value Added Tax

Mrs. Ahmed stated that the Finance Act had made provisions support Micro, Small and Medium Enterprises (MSMEs) and soften the effect of the VAT rate increase on companies in a bid to increase employment and boost the economy.

“I want to state that one of the key provisions in the finance act 2019 that have elicited a lot of interest is the increase in the VAT from 5% to 7.5%, and to remind us all, the finance bill has made copious provisions to improve the ease of doing business; so we have a category of companies that have turnover of 25% and below that will be paying no taxes at all, and also we have reduced tax rates for companies that have turnover from 25 million to 100 million from 30% to 30%.

“The essence of this is to encourage formalization of businesses from the informal sector and also to encourage businesses to grow and become more productive, thereby increasing employment and also meeting the commitment of Mr. President to remove 100 million Nigerians out of poverty over the next 10 years.

“The effective date for the VAT increase from 5-7.5% will be the 1st of February 2020,” she stated.

President Muhammadu Buhari last week, signed the 2020 Finance Bill into law after it had announced plans in September 2019, to review the VAT through consultations at various levels in the country.

FAAC Shares N716.2bn To FG, States And LG’s For December 2019

EFCC Discovers 49m Naira At Kaduna Airport

 

The Federation Accounts Allocation Committee (FAAC) has shared a sum total of N716.298 billion to the Federal Government, States and Local Government Councils for December 2019.

A statement by the Deputy Director, Press and Public Relations, Henshaw Ogubike, said the total sum comprised revenue from Value Added Tax (VAT), Exchange Gain and the Statutory Revenue.

READ ALSO: FG To Ban Foreign Vessels From Operating In Nigeria

It stated that from the total revenue, the Federal Government received N287.929 billion, the State Governments received N191.302 billion, and the Local Government Councils received N143.698 billion.

Oil Producing States received N50.279 billion as 13 percent derivation revenue and the Revenue Generating Agencies received N43.089 billion as the cost of revenue collection.

“A breakdown of the distribution showed that from the gross statutory revenue of N600.314 billion, the Federal Government received N271.361 billion, the State Governments received N137.638 billion, the Local Government Councils received N106.113 billion, the Oil Producing States received N50.149 billion as 13% derivation revenue and the Revenue Collecting Agencies received N35.053 billion as cost of collection.

“From the Value Added Tax (VAT) revenue of N114.806, the Federal Government received N16.015 billion, the State Governments received N53.386 billion, the Local Government Councils received N37.369 billion and the Revenue Generating Agencies received N8.036 billion as cost of revenue collection.”

The statement added that in December 2019, there were significant increases in revenues from Companies Income Tax(CIT), Value Added Tax (VAT) Oil and Gas Royalties and Petroleum Profit Tax (PPT), while import duty increased marginally.

Meanwhile, as of January 15, 2020, the balance in the Excess Crude Account (ECA) was $324.968 million.

It’s Official! Nigerians To Pay 7.5 Percent Value Added Tax

Senate Asks Nigerian Govt To Declare Emergency On Unemployment
File photo.

 

Nigerians will now start paying 7.5 percent as Value Added Tax (VAT) after its increase was captured in the newly approved 2019 finance law.

President Muhammadu Buhari on Monday in Abuja signed the 2020 Finance Bill into law, increasing it from an initial 5 percent.

A statement by the Special Adviser to the President on Media and Publicity, Femi Adesina explained that the Finance law has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws.

“These objectives are; Promoting fiscal equity by mitigating instances of regressive taxation; Reforming domestic tax laws to align with global best practices; Introducing tax incentives for investments in infrastructure and capital markets; Supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and Raising Revenues for Government.

“The draft Finance Bill proposes an increase of the VAT rate from five percent to 7.5 percent, as such, the 2020 Appropriation Bill is based on this new VAT rate,” he added.

RELATED: Buhari Signs Finance Bill Into Law

The Federal Government had in September 2019, announced plans to review the VAT through consultations at various levels in the country.

Minister of Finance Zainab Ahmed who disclosed this, stated that the consultation will be with the states, local governments, and the lawmakers as well as with the Nigerian public before the VAT increase will take effect.

Mrs. Ahmed stressed that the VAT increase will be more beneficial to state governments and Local Government Areas (LGAs) in the country.

The new VAT rate is expected to shore up Federal Government revenue and it is expected to be deployed to fund health and education sectors as well as infrastructure projects.

Some food items have been exempted from the new VAT including; Brown and white bread; Cereals including maize, rice, wheat, millet, barley, and sorghum; Fish of all kinds; Flour and starch meals; Fruits, nuts, pulses and vegetables of various kinds.

Others are; Roots such as yam, cocoyam, sweet and Irish potatoes; Meat and poultry products including eggs; Milk; Salt and herbs of various kinds; and Natural water and table water.

The Federal Government also plans to raise the threshold for VAT registration to N25 million in turnovers per annum, such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for Micro, Small and Medium-sized businesses.

Like Senate, Reps Pass Finance Bill Proposing VAT Increase, Others

Speaker of the House of Representatives, Femi Gbajabiamila, and some lawmakers at the lower chamber of the National Assembly in Abuja on November 28, 2019. Photo: [email protected]

 

 

The House of Representatives has passed the Finance Bill, 2019 submitted by President Muhammadu Buhari.

Members present at Thursday’s plenary passed the bill one week after it scaled through the third reading and was passed on the floor of the Senate in Abuja.

The bill seeks to amend six tax provisions and make them more responsive to tax reform policies.

Apart from the worries expressed by a cross-section of Nigerians concerning the increase in Value Added Tax on specific goods and services from 5 per cent to 7.5 percent, the bill also amends the tax provision of the Customs and Excise Tariff Act to encourage local manufacturers.

It introduces tax incentives for investment in infrastructure, capital markets and supports small businesses.

READ ALSO: Senate Passes Finance Bill Proposing VAT Increase, Others

The Finance Bill will reform the current tax regime by amending seven acts namely: Petroleum Profit Tax Act, Custom and Excise Tax Act, Company Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act, and Capital Gains Act.

Meanwhile, the House has urged the Nigeria Police to ensure that all policemen on highway patrol were properly dressed in uniforms with their vehicles properly numbered.

The lawmakers were worried that policemen on highway patrol do not wear any means of identification such as name tags, boots, and even berets.

They noted that as a result of this, criminals take advantage to ambush unsuspecting Nigerians on the highways and rob them of their valuables.

The House, was, however, convinced that if policemen were properly kitted and their vehicles numbered, it would be easier for road users to clearly differentiate them from criminals on the nation’s highways.

Thereafter, the House Committee on Police Affairs was mandated to investigate why policemen on highway patrols were not properly kitted.

The lawmakers asked the committee to report back in four weeks.

Budget 2020: 10 Food Items Exempted From VAT

 

The Value Added Tax (VAT) Act in Nigeria exempts pharmaceuticals, educational items, and basic commodities.

President muhammadu while presenting the 2020 budget at the National Assembly on Tuesday, stated that VAT exemptions are expanding under the Finance Bill, 2019.

He noted specifically that section 46 of the Finance Bill, 2019 expands the exempt items to include some more items including food.

Below are some of the items that are exempted from the VAT act.

a. Brown and white bread;

b. Cereals including maize, rice, wheat, millet, barley and sorghum;

c. Fish of all kinds;

d. Flour and starch meals;

e. Fruits, nuts, pulses and vegetables of various kinds;

f. Roots such as yam, cocoyam, sweet and Irish potatoes;

g. Meat and poultry products including eggs;

h. Milk;

i. Salt and herbs of various kinds; and

j. Natural water and table water.

READ ALSO: Five Statutory Transfers Within The 2020 Budget

The President in his speech added that his proposals also raise the threshold for VAT registration to N25 million in turnover per annum, such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for Micro, Small and Medium-sized businesses.

According to President Buhari, it is absolutely essential to intensify the nation’s revenue generation efforts.

He notes that his administration remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms.

The Quick Figures From 2020 Budget Proposal

 

Proposed 2020 Budget
An overview of President Buhari’s Proposed 2020 budget

 

 

President Muhammadu Buhari on Tuesday presented the budget for the 2020 fiscal year to the joint session of the National Assembly.

The budget is based on an oil price benchmark of US$57 per barrel, a daily oil production estimate of 2.18 mbpd. and an exchange rate of N305 per US Dollar.

Along with the budget proposal, a Finance Bill was presented to the National Assembly for consideration and passage into law.  The draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. The 2020 budget revenues estimates is based, in part, on the new proposed VAT rate.

The sum of N8.155 trillion is estimated as the total Federal Government revenue in 2020 and comprises oil revenues of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion. 

An aggregate expenditure of N10.33 trillion is proposed for the Federal Government in 2020. The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers). Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion.

 

Statutory Transfers

The sum of N556.7 billion is provided for Statutory Transfers in the 2020 Budget and includes:

  1. N125 billion for the National Assembly;
  2. N110 billion for the Judiciary;
  3. N37.83 billion for the North East Development Commission (NEDC);
  4. N44.5 billion for the Basic Health Care Provision Fund (BHCPF);
  5. N111.79 billion for the Universal Basic Education Commission (UBEC);
  6. N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

 

Recurrent Expenditure

The non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019. This increase reflects the new minimum wage as well as our proposals to improve remuneration and welfare of our Police and Armed Forces. You will all agree that Good Governance, Inclusive Growth and Collective Prosperity can only be sustained in an environment of peace and security.

Overhead costs are projected at N426.6 billion in 2020.

An overview of President Buhari's Proposed 2020 budget
An overview of President Buhari’s Proposed 2020 budget

Capital Expenditure

An aggregate sum of N2.46 trillion (inclusive of N318.06 billion in statutory transfers) is proposed for capital projects in 2020.

At 24 percent of aggregate projected expenditure, the 2020 provision falls significantly short of the 30 percent target in the Economic Recovery and Growth Plan (ERGP) 2017-2020.

Some of the key capital spending allocations in the 2020 Budget include:

  1. Works and Housing: N262 billion;
  2. Power: N127 billion;
  3. Transportation: N123 billion;
  4. Universal Basic Education Commission: N112 billion;
  5. Defence: N100 billion;
  6. Zonal Intervention Projects: N100 billion;
  7. Agriculture and Rural Development: N83 billion;
  8. Water Resources: N82 billion;
  9. Niger Delta Development Commission: N81 billion;
  10. Education: N48 billion;
  11. Health: N46 billion;
  12. Industry, Trade and Investment: N40 billion;
  13. North East Development Commission: N38 billion;
  14. Interior: N35 billion;
  15. Social Investment Programmes: N30 billion;
  16. Federal Capital Territory: N28 billion; and
  17. Niger Delta Affairs Ministry: N24 billion.

 

Budget Deficit

The Budget deficit is projected to be N2.18 trillion in 2020. This includes drawdowns on project-tied loans and the related capital expenditure.

This represents 1.52 percent of estimated GDP, well below the 3 percent threshold set by the Fiscal Responsibility Act of 2007, and in line with the ERGP target of 1.96 percent.

 

VAT Increase More Beneficial To States And LGs, Says Finance Minister

File photo of Mrs Zainab Ahmed, Minister of Finance

 

The Minister of Finance, Mrs Zainab Ahmed has said that the proposed increase in Value-Added Tax (VAT) from 5 to 7.5 per cent will be more beneficial to state governments and Local Government Areas (LGAs) in the country, many of which are already facing difficult conditions.

This was disclosed in a statement issued by the Minister’s SA on Media and Communication, Yunusa Abdullahi on Friday.

According to Mrs Ahmed, the proposal is subject to legislative intervention by the National Assembly who will have to amend the Revenue Act to reflect the proposed increase.

She added that the increase will exempt the basic necessities such as food, medicines and education.

“The benefit of an increase in VAT is, therefore, more beneficial to state governments and Local Government Areas (LGAs) in the country, many of which are already facing difficult conditions. The proposed increase in VAT is therefore expected to create additional fiscal space.

“The proposed increase is however subject to legislative intervention by the National Assembly who will have to amend the Revenue Act to reflect the proposed increase.

“The existing VAT Act exempts the basic necessities such as food, medicines and education which therefore minimises the impact on the poor and vulnerable segments of the Nigerian society from the burden thereof. It is expected that the exemptions will be maintained in the amended Act.”

RELATED: FG To Increase VAT From 5 To 7.5 Percent

Mrs Ahmed maintained that if the increase is correctly implemented, it could bring in huge revenues for the country and reduce fiscal deficit burden.

“It is gladdening that the VAT increase if correctly implemented, could bring in huge revenues, which would actually reduce the fiscal deficit burden.

“The government’s borrowing programme could then ease and certainly the financially affected states and local governments could later focus on issues like poverty reduction, healthcare and power generation and transmission.

“According to the industry experts, the VAT increase, if enforced properly, forms part of the fiscal consolidation strategy for the country. It could, in fact, help address the fiscal deficit problem and the revenues estimated to be collected could actually mean lowering of the fiscal deficit burden for the government across board.”

The Federal Government on Wednesday said that consultations will begin at all levels on the increase from 5 – 7.5 per cent.

Nigeria’s VAT Revenue Increases In 2019 Second Quarter

 

The Nigerian Government has generated the sum of N311.94 billion from Value Added Tax (VAT) in the second quarter of 2019.

The National Bureau of Statistics (NBS) disclosed this in a report titled ‘Sectoral Distribution Of Value Added Tax (Q2 2019)’ published on Tuesday.

In the report, the figure generated in the Q2 is higher than the N289.04 billion generated in the first quarter of the year in review.

It revealed that other manufacturing generated the highest amount of VAT with a sum of N34.43billion.

READ ALSO: Beware Of Fraudulent Loan Offers, CBN Warns Nigerians

According to the NBS, this is closely followed by Professional Services which generated N29.58bn, while Commercial and Trading generated N16.27bn and Mining generated the least with a figure of N50.60millon.

The agency explained that the data used in preparing the report were provided by the Federal Inland Revenue Service (FIRS) and verified and validated by the NBS.

The Executive Summary of the report read:

Sectoral distribution of Value Added Tax (VAT) data for Q2 2019 reflected that the sum of N311.94bn was generated as VAT in Q2 2019 as against N289.04bn generated in Q1 2019 and N269.79bn generated in Q2 2018 representing 7.92% increase QoQ and 16.95% increase YoY.

Other manufacturing generated the highest amount of VAT with N34.43bn generated and closely followed by Professional Services generating N29.58bn, Commercial and Trading generating N16.27bn while Mining generated the least and closely followed by Pharmaceutical, Soaps & Toiletries and Textile and Garment Industry with N50.60mln, N250.09mln and N316.91mln generated respectively.

Out of the total amount generated in Q2 2019, N151.56bn was generated as Non-Import VAT locally while N94.90bn was generated as Non-Import VAT for foreign. The balance of N65.48bn was generated as NCS-Import VAT.

Also, see the table below:

 Q1 2019 Q2 2019 * Quarter on Quarter % Year on  Year %
 Classification Value Added Tax Value Added Tax Q1 2019 / Q2 2019 Q2 2019 / Q2 2018
 Agricultural and Plantations                                     627,309,855.38                                     738,117,007.17                                     17.66                                   (5.54)
 Automobiles and Assemblies                                     421,443,588.76                                     481,438,702.64                                     14.24                                   (1.50)
 Banks & Financial Institutions                                  4,195,911,497.61                                  4,060,359,569.91                                     (3.23)                                (14.47)
 Breweries.Bottling and Beverages                                10,835,290,704.46                                11,272,962,075.34                                       4.04                                  19.49
 Building and Construction                                  2,744,836,873.65                                  2,400,570,624.59                                   (12.54)                                (10.14)
 Chemicals, Paints and Allied Industries                                     522,706,937.42                                     543,426,279.34                                       3.96                                  71.35
 Commercial and Trading                                14,924,509,446.19                                16,269,201,434.21                                       9.01                                     1.00
 Conglomerates                                  1,512,442,362.40                                  1,047,208,422.52                                   (30.76)                                   (7.99)
 Federal Ministries & Parastatals                                  7,937,268,043.87                                  8,109,935,510.66                                       2.18                                  46.15
 Gas                                  1,529,466,433.36                                  1,074,711,768.56                                   (29.73)                                (15.33)
 Hotels and Catering                                  1,615,988,078.22                                  2,124,908,064.49                                     31.49                                  31.38
 Local Government Councils                                     507,277,849.92                                     495,197,499.61                                     (2.38)                                  36.79
 Minning                                       59,884,887.89                                       50,598,095.44                                   (15.51)                                     5.74
 Not Available                                  4,016,993,631.69                                  3,768,879,140.15                                     (6.18)                                   (1.89)
 Offshore Operations                                     529,173,488.54                                     657,941,208.43                                     24.33                                  20.22
 Oil Marketing                                  2,340,806,300.43                                  1,996,390,157.13                                   (14.71)                                  15.43
 Oil Producing                                  8,490,827,446.86                                  7,811,745,534.66                                     (8.00)                                   (0.33)
 Other Manufacturig                                31,423,299,458.75                                34,429,042,995.83                                       9.57                                     6.07
 Petro-Chemical and Petroleum Refineries                                     956,166,806.78                                  1,198,575,081.52                                     25.35                                (15.91)
 Pharmaceutical,Soaps and Toileteries                                     201,580,318.33                                     250,092,740.05                                     24.07                                  63.03
 Pioneering                                  3,522,672,251.92                                  2,361,324,014.43                                   (32.97)                                  16.69
 Professional Services                                24,315,013,565.66                                29,583,674,334.79                                     21.67                                  47.79
 Properties and Investments                                     940,729,119.25                                  1,058,623,649.02                                     12.53                                   (1.55)
 Publishing,Printing, Paper Packaging                                     365,182,010.80                                     449,848,248.54                                     23.18                                (14.80)
 State Ministries & Parastatals                                  8,050,491,035.62                                10,445,379,901.29                                     29.75                                  11.90
 Stevedoring, Clearing and Forwarding                                  1,743,878,248.89                                  1,132,417,313.43                                   (35.06)                                (16.71)
 Textile and Garment industry                                     298,137,975.21                                     316,908,615.69                                       6.30                                   (8.44)
 Transport and Haulage Services                                  2,434,185,088.46                                  7,432,803,909.43                                  205.35                                278.15
 Sub-Total (Non-Import VAT) Local                              137,063,473,306.32                              151,562,281,898.87                                        10.58                                     17.33
 Non-Import (foreign) VAT                                98,967,007,748.51                                94,904,294,115.91–                                        4.11                                     16.92
 NCS-Import VAT                                53,007,856,392.82                                65,476,489,855.17                                        23.52                                     16.12
 Grand Total                     289,038,337,447.65                     311,943,065,869.95                                          7.92                                     16.95

VAT Increase Can Further Slow Down The Economy, Tinubu Tells FG

VAT Increase Can Further Slow Down The Economy, Tinubu Tells FG
APC National Leader, Bola Tinubu, speaks at the 11th Bola Tinubu Colloquium in Abuja on March 28, 2019. Photo: Channels TV/ Sodiq Adelakun.

 

The national leader of the All Progressives Congress (APC), Bola Tinubu, has advised the Nigerian Government against the planned to increase the Value Added Tax (VAT).

Addressing a gathering at the Bola Tinubu Colloquium on Thursday in Abuja, he warned that such decision was capable of worsening the nation’s economy.

“Consumers’ spending is slipping, and this is where I will stop and appeal to Professor Yemi Osinbajo, the Vice President, and his team to put a huge question mark on any increase of VAT, please,” the former governor pleaded.

He added, “If we reduce the purchasing power of the people, we can further slow down the economy.”

READ ALSO: Economy Will Be More Vulnerable, Manufacturers Warn Nigerian Govt Against VAT Increase

Officials of the Federal Ministry of Finance had defended the Medium-Term Expenditure Framework (MTEF) that VAT be increased by 50 per cent during a presentation in the Senate on Wednesday.

But the government’s decision was greeted by criticism from stakeholders in the business sector, including the Manufacturers Association of Nigeria (MAN) which said VAT increase would leave the economy in a more vulnerable state.

In its bid to generate more revenue, Tinubu who advised the government to reconsider its decision suggested another way to go about it.

He said, “Let’s widen the tax net. Those who are not paying now, if it is inclusive of Bola Tinubu, let the net get bigger and we take in more taxes and that is what we must do in the country, instead of the additional layer of tax.”

According to him, Nigeria is still in the process of defining itself politically and economically.

The APC leader, however, noted that it was tempting and easy to borrow indiscriminately from the nations that have mastered the act of democratic governance and have achieved economic prosperity.

He said the nation cannot afford to lay back and must work hard not in mindless devotion to the ways of the other nations to achieve any durable progress in the process.

VAT Increase: Economy Will Be More Vulnerable, Manufacturers Warn Nigerian Govt

VAT Increase: Economy Will Be More Vulnerable, Manufacturers Warn FG

 

The Manufacturers Association of Nigeria (MAN) has asked the Federal Government to tread with caution in the drive for improved revenue.

The Director-General of MAN, Mr Segun Ajayi-Kadir, said this in a statement on Wednesday while reacting to the plan by the government to increase the Value Added Tax (VAT).

Officials of the Federal Ministry of Finance had defended the Medium-Term Expenditure Framework (MTEF) that VAT be increased by 50 per cent during a presentation in the Senate.

READ ALSO: ‘They Have Taken Us Hostage,’ Agric Minister Decries Nigeria’s Rate Of Food Imports

Ajayi-Kadir, however, said such policy was not ‘manufacturing friendly’, adding that implementing it would have a negative effect as a result of the planned increase in minimum wage.

“As plausible as the recommendation to increase VAT may look, implementing it at this time would boomerang because the timing is inappropriate, especially at a time when the minimum wage of N30,000 was just agreed upon,” he stated.

The MAN DG added, “This could send a wrong signal that the government is not sensitive to the plight of the low- and middle-income earners, who are clearly in the majority. The Nigerian economy will be in a more vulnerable state if VAT is increased.

“No controversy, the burden of the tax would be shifted to the Nigerian consumers that are already struggling, the economy would certainly experience demand crunch, inventory of unsold items would soar, profitability of manufacturing concerns would be negatively impacted, many factories will witness serious downturn or wind down operations.”

Ajayi-Kadiri, therefore, advised the government to widen the tax net rather than increase the rate in order to meet the growing need for more revenue to address the development objective of the country.

He also appealed to the government not to increase the VAT at this time but consider the implementation of the afore-mentioned tax specific recommendations.

The MAN DG asked the government to continue to ramp-up support for the manufacturing sector in the best interest of the people.

PDP Rejects Moves To Increase VAT, Says Buhari’s Administration Is Insensitive

 

The Peoples Democratic Party (PDP) and the party’s Presidential Campaign Organization (PPCO) have rejected the plans by the Federal Government to increase the Value Added Tax on some items in the course of the year

According to the PDP and its campaign organization, the move to increase VAT is anti-people and not in the best interest of Nigerians.

The opposition party said the plan is insensitive on the part of the government.

“President Buhari is aware that the increase in taxes directly results in an increase in the costs of common goods and services on which families depend for survival, yet he is imposing them on the system.

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“It is indeed heartrending that at a time other leaders all over the world are seeking ways to lift burdens off the shoulders of their citizens, President Buhari is rather planning to put more burden on Nigerians, if he is allowed to continue in office beyond May 29” PDP said.

The party also alleged that President Buhari lacks the capacity to harness the nation’s resources to create wealth for the benefit of Nigerians, but “harbours the plan to fleece the people with stringent taxes”.

According to a statement signed by Kola Ologbondiyan, the PPCO spokesman, the PDP claimed that the re-election of President Buhari will “further plunge the nation into hardship”.

It urged Nigerians to vote wisely in the coming elections and ensure that the PDP is voted in, adding that a vote for the opposition will see to a transformation of Nigeria’s economy.