RMAFC wants VAT raised to 7.5 per­cent

Daily Trust - - FRONT PAGE - By Chris Agabi with agency re­port

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 two­day 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.

Min­is­ter of Power, Works & Hous­ing, Mr Ba­batunde Fashola, SAN (mid­dle), Ag. CEO, Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion, Mr Anthony Akah (right) and the Man­ag­ing Direc­tor of the Benin Elec­tric­ity Dis­tri­bu­tion Com­pany(BEDC), Mrs Funke Osi­bodu (left) dur­ing the Sev­enth Monthly Meet­ing of the Min­is­ter with sec­toral par­tic­i­pants in the Power Sec­tor hosted by the Benin Elec­tric­ity Dis­tri­bu­tion Com­pany at the Benin Trans­mis­sion Sta­tion, Edo State on Mon­day. ARIK AIR

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