- Labour, Stakeholders Says no to 50% VAT Increase
The Nigeria Labour Congress (NLC) has kicked against the approved 50 percent increase in Value Added Tax (VAT) to 7.5 percent from the current 5 percent.
The Federal Executive Council (FEC) had approved the Federal Inland Revenue Service (FIRS) request to increase VAT by 2.5 or 50 percent of the current 5 percent to 7.5 percent.
A move Nigerians described as anti-people and instituted to wipe off the gains of the new minimum wage.
The Nigeria Labour Congress (NLC) and the Nigeria Employers’ Consultative Association (NECA) said the move would render the N30,000 new minimum wage useless.
Comrade Emma Ugboaja, General Secretary, NLC, noted that the increment would hurt new job creation as it wasn’t well thought-out.
He said: “We reject the increase as it clearly seeks to erode whatever purchasing power the new minimum wage may bring. We see it as a move not well thought through with the welfare of Nigeria wage earners in mind. Its impact on Nigerian manufacturers and job creation and retention will be nightmarish. It is clearly insensitive to the plight of the ordinary Nigerians. What the government needs to do is to widen the tax net and get people to pay tax and not to over tax those that are at present in the net.”
Mr Timothy Olawale, NECA’s director-general, who also condemn the increment, argued that it would neutralise the benefits of the recently increased minimum wage.
He said with the economy growing at a slower pace than expected and unemployment at a record high of 23.1 percent, it is counterproductive to hike VAT.
“Also, International Monetary Fund (IMF) has recently revised downward its global economic growth forecast to 3.2 per cent due to sluggish in global economy.
“Therefore, this suggests, that at such period of time, economies should be formulating fiscal measures/policies to stimulate their economies,” Olawale said in a statement he issued in Lagos.
A financial expert, Dr Suleyman Ndanusa, former director-general, Securities and Exchange Commission (SEC), also warned that the move would hurt consumer spending and weigh on sales.
“The timing is quite wrong; at this point in time, our economy needs to be helped by policies that would ginger more consumption and more disposable income for the people. The paradigm for me has to change. Are we increasing tax just for the purpose of revenue or managing our fiscal policy taxation for growth?
“The paradigm has shifted from revenue-driven taxation to growth-driven taxation,” Ndanusa stated.
He advised that “Nigeria should be thinking on what to do to create the genetic energy for our economy at this time, where we are growing at 2.5 per cent.”
People’s Democratic Party Position on VAT
The opposition party, the People’s Democratic Party (PDP), said the party rejected the decision of President Muhammadu Buhari to raise VAT, saying it would further hurt Nigerians.
Kola Ologbondiyan, the national publicity secretary, PDP, said: “Indeed, only an administration that does not have the mandate of the people can seek to adopt such oppressive stance against its citizens.
“President Buhari ought to be aware that an increase in VAT will worsen our decrepit economy and put more pressure on families and business as it will result in increase in costs of goods and services that have direct bearing on the welfare of the people.
“Our party charges the Buhari Presidency not to further punish Nigerians by imposing harsh tax regime to make up for its crass incompetence and lack of capacity to effectively harness and manage our resources to create wealth for the benefit of the people.
“It is even more painful that the Buhari Presidency cannot give account of the huge resources at its disposal, including the taxes it has been collecting in the last four years, most of which are frittered to service the wasteful lifestyle of the cabal at the Presidency and All Progressives Congress (APC) chieftains.
“Instead of foisting more tax burden on Nigerians, the PDP charges President Buhari to account for and recover the over N14 trillion oil money established to have been stolen under his watch in the last four years.
“It is disheartening that at the time Nigerians ought to be enjoying the economic recovery and empowerment blueprint set out by Atiku Abubakar, which included slash in taxes and levies, they are rather faced with an unjustifiable and indefensible tax increase,” the party added.
Food Inflation Hits Record High of 19.56 Percent in December 2020
Food Index, which measures prices of food items, grew by 19.56 percent in the month of December 2020 amid herdsmen attacks and flooding.
In the latest report from the National Bureau of Statistics (NBS), increases were recorded on Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On month on monthly basis, the food sub-index rose by 2.05 percent in December 2020, 0.01 percent from 2.04 percent recorded in November 2020.
“The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 percent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) percent” the report stated.
Headline inflation number increased by 15.75 percent in the month of December 2020, up from 14.89 percent.
The report noted that increases were recorded in all COICOP divisions that yielded the Headline index.
On a month-on-month basis, “the urban index rose by 1.65 percent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 percent in December 2020, up by 0.02 percent above the rate that was recorded in November 2020 (1.56 percent).”
Nigeria’s Inflation Rate Rises to 15.75 Percent in December
Inflation rate in Africa’s largest economy, Nigeria, rose at the fastest pace in several months in the last month of 2020, according to the latest report from the National Bureau of Statistics (NBS).
Consumer Price Index (CPI), which measures inflation rate, increased by 15.75 percent year-on-year in December 2020, representing a 0.86 percent increment from the 14.89 percent attained in November.
On a monthly basis, headline inflation rose by 1.61 percent in the month of December, representing 0.01 percent increase from the 1,60 percent posted in the month of November.
Food gauge that measures prices of items in Africa’s largest economy increased by 19.56 percent in December from 18.30 percent in November.
NBS attributed the increase to the surge in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On a monthly basis, the food sub-index grew by 2.05 percent in December 2020, an increase of 0.01 percent points from 2.04 percent recorded in November 2020.
The more stable annual rate showed Food sub-index over the last 12 months increased by 0.42 percent points from 15.75 percent in November to 16.17 percent in December.
Herdsmen attacks, the rising cost of fuel, flooding and the wide exchange rate are some of the key factors impacting the cost of food items in Nigeria, especially in December when demands were the highest.
Still lack of enough fiscal buffer to cushion the effect of COVID-19 and ease forex scarcity also drag on raw materials necessary for the production of some import-dependent items.
Joe Biden on Thursday Unveiled $1.9 Trillion Stimulus Package
President-elect, Joe Biden, on Thursday revealed more details of his $1.9 trillion coronavirus rescue package for households and businesses impacted by the COVID-19 pandemic in the United States.
In the proposal called the American Rescue Plan, several stimulus measures were detailed in the hope it would mitigate the impact of COVID-19 on families and businesses.
Below are the highlights of the Rescue Plan
- Direct payments of $1,400 to most Americans, bringing the total relief to $2,000, including December’s $600 payments
- Increasing the federal, per-week unemployment benefit to $400 and extending it through the end of September
- Increasing the federal minimum wage to $15 per hour
- Extending the eviction and foreclosure moratoriums until the end of September
- $350 billion in state and local government aid
- $170 billion for K-12 schools and institutions of higher education
- $50 billion toward Covid-19 testing
- $20 billion toward a national vaccine program in partnership with states, localities and tribes
- Making the Child Tax Credit fully refundable for the year and increasing the credit to $3,000 per child ($3,600 for a child under age 6).
Speaking on Thursday, Joe Biden, said “Tonight, I lay out my first step, the American Rescue Plan that will tackle the pandemic and get direct financial assistance and relief to Americans who need it the most.”
“Next month, in my first appearance before a joint session of Congress I will lay out my ‘build back better’ recovery plan,” Biden said. “It will make historic investments in infrastructure, manufacturing, innovation, and research and development in clean energy.”
“Our ‘rescue and recovery’ plan is a path forward with both serious of purpose and a clear plan, with transparency and accountability, with a call for unity that is equally necessary,” he said.
“It’s not hard to see that we’re in the middle of a once-in-several-generations economic crisis with a once-in-several-generations public health crisis. A crisis of deep human suffering is in plain sight and there’s no time to waste,” Biden said. “We have to act, and we have to act now.”
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