Human Rights

Nigeria: RMAFC Pushes for Vat Increase to 7.5%

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) is advocating for a 50 per cent increase in Value Added Tax (VAT) from the present 5 per cent, the Daily Trust reports.

The disclosure is coming on the heels of experts warning against increase in VAT and other forms of taxes at the prevailing economic situation.

The VAT is borne by the final consumer of goods and services (except medicines, basic foods, exports, books/educational materials, baby products, farm machineries and few other items. Thus, VAT also adds to the marginal costs of all goods and services that are taxable.

VAT revenue is collected by the Federal Inland Revenue Services (FIRS) and shared among the three tiers of government.

Chairman of RMAFC, Mr Shettima Gana who spoke yesterday in Kano at a two-day National Revenue Retreat on strategies to expand the revenue base of the government and the new sources for revenue generation, said a rise in VAT is one way government can get more revenue.

This is in spite of the dwindling disposable income of the ordinary Nigerian and rising unemployment level. The proposition if executed will see the VAT on all consumer goods among others, rise by 2.5 per cent. Moreover, the Commission wants it pegged at 10 per cent in the long run.

Experts have argued that, increasing VAT will make goods and services too expensive which is a disincentive to commercial activities and could trigger inflation.

Gana however, argued that Nigeria’s current VAT rate is one of the lowest in the world. He said South Africa’s VAT is 14 per cent, Togo, Senegal, Guinea and Chad are 18 per cent while that of Niger Republic is 19 per cent.

On VAT revenue sharing, the Federal Government receives 15 per cent, state governments, 50 per cent and the local governments get 35 per cent.

In a News Agency of Nigeria (NAN), Gana also said government would be advised “to introduce additional taxes, such as toll tax for the road, luxury goods tax on mansions, exotic cars, private jets and jewelleries as well as inheritance tax to be paid by a person who inherits money or properties.

A consultant tax expert and first female past president of the Chartered Institute of Taxation of Nigeria (CITN), Mrs Adebimpe Balogun who spoke at the 8th Wole Soyinka Centre for Media Lecture Series said any tax increase at this time would be suicidal.

She had said “dwindling oil revenue has made it pertinent for every state to grow its Internally Generated Revenue (IGR), but it is not the time to increase taxes.”

She said the government should be more interested in expanding the tax base to capture portfolio contractors and transactions that escape the drag net of the tax agencies.

Meanwhile the Minister of Finance, Mrs. Kemi Adeosun , has assured Nigerians that the Federal Government’s drive for enhanced revenue generation would not be a burden to Nigerians.

The minister, who also spoke at the same retreat, said the revenue focus would not burden Nigerians but would ensure that all revenue due to government was collected with a high degree of efficiency.

She said government had identified over 1,000 dormant revenue lines, assuring those huge opportunities would be maximised.

Source: Daily Trust

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