The Federal Government under President Bola Ahmed Tinubu is proposing another increase in the value-added tax rate in Nigeria.
Taiwo Oyedele, Chairman of the presidential committee on fiscal policy and tax reforms, made this known at a policy exposure and impact assessment seminar organised by the committee on Monday.
He likened the current government to a magician, as he said they aim to keep prices of goods at the same rate across the country if the VAT is eventually increased.
“We are proposing that the federal government’s portion should be reduced from 15 per cent to 10 per cent. States’ portion will be increased, but they would share 90 per cent with local governments.”
“In 1986, we had sales tax collected by states. The military came up with VAT in 1993 and stopped sales tax, so they said it would collect VAT and return 15 per cent as the cost of collection, and that is the 15 per cent charged today came about. But we think it is too much.”
Speaking on, he said the Nigeria’s economy “is more than 50 per cent in services, and if I just stop at this, many states will be broke because VAT collection will go down by more than 50 per cent, and it won’t even fly.”
“So we, therefore, need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services, and accommodation will carry zero per cent VAT. So for the poor and small businesses, no VAT.
“We have spoken to businesses about it, and they won’t increase the product price. We want to make sure when we do VAT reform, no one will increase the price of commodities. We will work the mathematics with the private sector,” he added.
Join our WhatsApp community via https://rb.gy/7jahti for instant and latest news updates.