Pri­vate sec­tor knocks FG as Buhari signs fi­nance bill

• In­creas­ing VAT rate amounts to ero­sion of cap­i­tal – LCCI • You can’t op­er­ate bank ac­count with­out TIN, FIRS in­sists • FG to earn N2.08tn from VAT • High­lights of bill

The Punch - - FRONT PAGE - John Ameh, Sa­muel Awoy­infa, Anna Okon and Ifeanyi Onuba

The or­gan­ised Pri­vate Sec­tor on Mon­day warned the gov­ern­ment against fleec­ing the peo­ple and en­dan­ger­ing pro­duc­tiv­ity.

They spoke in re­sponse to the sign­ing of the Fi­nance Bill into law by the Pres­i­dent, Ma­jor Gen­eral Muham­madu Buhari (retd.) in Abuja.

The law her­alds a new regime of Value Added Tax rate of 7.5 per cent, up from five per cent.

The Nige­ria Em­ploy­ers’ Con­sul­ta­tive Associatio­n warned the gov­ern­ment against see­ing the pri­vate sec­tor as a cash cow in its drive to in­crease rev­enue.

on the other hand, the La­gos Cham­ber of Com­merce and In­dus­try ex­pressed worry over the in­crease in VAT; even it said that it was in­ap­pro­pri­ate to com­pel loss-mak­ing firms to pay tax, no mat­ter how lit­tle.

The Di­rec­tor Gen­eral, NECA, Dr Ti­mothy olawale, noted that over­bur­den­ing the pri­vate sec­tor with taxes would fur­ther im­pov­er­ish the cit­i­zens Buhari promised to take out of poverty.

he said, “The gov­ern­ment should not see the pri­vate sec­tor as a ‘cash cow’ in its drive to raise rev­enue, as it will do more harm to the al­ready bur­dened pri­vate sec­tor and fur­ther im­pov­er­ish cit­i­zens that the pres­i­dent promised to take out of poverty.

“The com­mon man will def­i­nitely be at the re­ceiv­ing end of the in­crease in VAT. Even if busi­nesses are taxed more through likely il­le­gal levies and rates out­side the pro­vi­sions of the law, they will nat­u­rally pass the cost to the cus­tomers whose pur­chas­ing power is al­ready at the low­est ebb.

“The gov­ern­ment should put mech­a­nisms in place to elim­i­nate leak­ages as a large chunk of the In­ter­nally Gen­er­ated Rev­enue re­alised does not find its way into gov­ern­ment cof­fers.

“They should dras­ti­cally cut the cost of gov­er­nance. Sev­eral aides kept at pro­hib­i­tive cost are need­less.”

he ac­knowl­edged that the gov­ern­ment had made pro­vi­sions in the law that were meant to ben­e­fit the masses while re­form­ing the lo­cal tax laws in line with global best prac­tices.

The new law amended the Petroleum Profit Tax Act, Cus­toms and Ex­cise Tar­iff Act, Com­pany In­come Tax Act, Per­sonal In­come Tax Act, Value Added Tax, Stamp Du­ties Act and the Cap­i­tal Gains Tax.

olawale said, “Apart from the in­crease in VAT, some other changes would in­clude a sit­u­a­tion where Nige­ri­ans who want to open or main­tain ac­counts with the de­posit money banks will not have to pro­vide their Tax Iden­ti­fi­ca­tion Num­ber to do so, which is com­mend­able.

“Again, the fact that the Fed­eral Gov­ern­ment has raised the thresh­old from which stamp duty will be charged for on­line trans­ac­tions from the cur­rent N1, 000 to N10,000.”

he rec­om­mended ag­gres­sive tax­payer en­light­en­ment and ex­pan­sion of the tax net to cap­ture more cit­i­zens as it had been re­ported that less than 40 per cent of Nige­ri­ans were tax com­pli­ant.

Di­rec­tor Gen­eral of the LCCI, Dr Muda Yusuf, said, “The in­crease in VAT from five per cent to 7.5 per cent amounts to ad­di­tional bur­den on in­vestors.

“Al­ready busi­nesses have been grap­pling with mul­ti­ple tax­a­tion, high im­port duty, high reg­u­la­tory charges, ex­clu­sion from the of­fi­cial forex mar­ket and high en­ergy cost.

“It is also dis­turb­ing that in Nige­ria, VAT is not treated as con­sump­tion tax. Most of­ten it is im­posed on the en­tire value chain of pro­duc­tion and in­vest­ment. This is why in­vestors will worry about the re­view.”

The LCCI boss urged the gov­ern­ment to scale up its com­mit­ment to the cre­ation an en­abling en­vi­ron­ment for in­vest­ment, adding “this should be from the per­spec­tive of pol­icy, reg­u­la­tory and macroe­co­nomic en­vi­ron­ment.”

Buhari had an­nounced the sign­ing of the bill through his ver­i­fied per­sonal twit­ter han­dle, @Mbuhari.

“I am pleased to an­nounce that this morn­ing, I signed into the law the Fi­nance Bill, 2019,” he tweeted.

The fi­nance bill pro­vides sev­eral rev­enue win­dows for the Fed­eral Gov­ern­ment to source funds, es­pe­cially for the im­me­di­ate fi­nanc­ing of the 2020 bud­get.

The coun­try’s bud­get for the year is N10.59tn, with a huge deficit of over N2tn.

Be­sides the VAT Act, the new law amended a num­ber of other ex­ist­ing laws, in­clud­ing the Petroleum Profit Tax Act; Cus­toms and Ex­cise Tar­iff Act; Com­pany In­come Tax Act; Per­sonal In­come Tax Act; Stamp Du­ties Act; and the Cap­i­tal Gains Tax.

The Fed­eral Ex­ec­u­tive Coun­cil had ap­proved 7.2 per cent new VAT rate on Septem­ber 10, 2019, while Buhari pre­sented the Fi­nance Bill to the Na­tional As­sem­bly on oc­to­ber 8 along with the 2020 Ap­pro­pri­a­tion Bill.

The Na­tional As­sem­bly even­tu­ally passed an amended ver­sion of 7.5 per cent as con­tained in the fi­nance bill be­fore law­mak­ers pro­ceeded on the Christ­mas and New Year break.

Both have now be­come Acts of the Na­tional As­sem­bly, the Pres­i­dent hav­ing given as­sent to them.

For the VAT, the Fed­eral Gov­ern­ment had ex­plained the ur­gency to in­crease it, say­ing that it would also pro­vide more funds to the 36 states and the 774 lo­cal gov­ern­ment coun­cils to en­able them to meet press­ing fi­nan­cial needs, es­pe­cially the pay­ment of the new min­i­mum wage of N30,000.

The Min­is­ter of Fi­nance, Bud­get and Na­tional Plan­ning, Mrs Zainab Ahmed, speak­ing on this, had stated, “we re­ported to coun­cil and coun­cil has agreed that we start the process to­wards the in­crease of the VAT rate. we are propos­ing and coun­cil has agreed, in­crease in the VAT rate from five per cent to 7.2 per cent.

“This is im­por­tant be­cause the Fed­eral Gov­ern­ment only re­tains 15 per cent of the VAT; 85 per cent is ac­tu­ally for the states and lo­cal gov­ern­ments. The states need ad­di­tional rev­enue to be able to meet the obli­ga­tions of the min­i­mum wage.

“This process in­volves ex­ten­sive con­sul­ta­tions that need to be made across the coun­try at var­i­ous lev­els and also it will in­volve the re­view of the VAT Act. So, it is not go­ing to be im­ple­mented im­me­di­ately un­til the Act is re­viewed.”

An­other pro­vi­sion of the new law is that the thresh­old on which stamp duty will be charged on on­line trans­ac­tions has been raised to N10, 000 from N1, 000.

Mean­while, the Pres­i­dency, in a state­ment on Mon­day, con­firmed that Buhari in­deed signed the Fi­nance Bill into law.

“Pres­i­dent Muham­madu Buhari Mon­day in State house signed the 2020 Fi­nance Bill into law. This is se­quel to its pas­sage by the Na­tional As­sem­bly and sub­se­quent for­ward­ing by the leg­is­la­ture to the Pres­i­dent for as­sent”, the Spe­cial Ad­viser to the Pres­i­dent on Me­dia and Pub­lic­ity, Mr Femi Adesina, said.

The state­ment re­called Buhari’s pre­sen­ta­tion to the Na­tional As­sem­bly.

It quoted him, “This Fi­nance Bill 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 and rais­ing rev­enues for gov­ern­ment.

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

Nige­ria to earn N2.08tn from VAT in­crease

The Fed­eral Gov­ern­ment is tar­get­ing about N2.08tn this year from the Value Added Tax rev­enue, ac­cord­ing to the Medium Term Ex­pen­di­ture Frame­work.

A break­down of the N2.08tn showed that the Fed­eral Gov­ern­ment alone would re­ceive about N315.47bn, rep­re­sent­ing 15 per cent; states, N1.04tn, rep­re­sent­ing 50 per cent; while the lo­cal gov­ern­ment ar­eas would get N751.43bn or 35 per cent.

No TIN, no bank ac­count, FIRS in­sists

head, Com­mu­ni­ca­tions and Ser­vi­com Depart­ment, Fed­eral In­land Rev­enue Ser­vice, Mr wa­hab Gbadamosi, told The PUNCH on Mon­day night that the im­ple­men­ta­tion date would be at the date the Act stip­u­lated it to com­mence.

he said, “The im­ple­men­ta­tion date will be at the date the act stip­u­lates it to com­mence.

“In any case, the pro­vi­sion has al­ways been part of the FIRS Act that any per­son who does not have the Tax Iden­ti­fi­ca­tion Num­ber should not be al­lowed to open a bank ac­count.”

A top of­fi­cial of gov­ern­ment told one of our cor­re­spon­dents that over the years, the rate of com­pli­ance with the no TIN no ac­count open­ing pro­vi­sion of the law among banks had been low.

“The prob­lem we have is that banks are not re­ally com­ply­ing with that pro­vi­sion. we have writ­ten to them but the rate of com­pli­ance has not been too ef­fec­tive,” the of­fi­cial who pre­ferred not to be named said.

Pho­tos: AFP

• Scenes from the Taal vol­cano in Tanauan town in Batan­gas Prov­ince, South of Manila...on Mon­day.

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