A fresh survey has revealed how Nigerians are being worried over gradual increase of the Value Added Tax (VAT), saying it could worsen inflation in the country.
There has been a plan progression in VAT up till 2027 by the Federal Government amid inflationary trend which has constantly to rise in the last thirty years.
A new report by Lagos-based data and intelligence firm, SB Morgen, revealed that many Nigerians are not comfortable with the tax increase as they believed that it would affect inflation negatively and deepen economic hardship in Nigeria.
The report showed that citizens were aware of the proposed reforms and generally viewed them favourably, particularly regarding the potential benefits for their businesses.
However, a good number of others expressed concern following the gradual increase of VAT rate from 7.5 per cent to 15 per cent by 2027.
Some of the respondents in the survey, were of the view that the tax hike could worsen inflationary pressures.
Others disagreed, saying the VAT would rather decrease high cost of goods and services.
Taiwo Oyedele, chairman of the Presidential Tax Policy and Fiscal Reforms is one of the people who differed.
In a recent statement, Oyedele contented that the VAT reforms were aimed at overhauling Nigeria’s tax system, bring the needed reliefs for the citizens that are suffering from a cost-of-living crisis fuelled by the twin reforms implemented mid last year.
He said the VAT reform, which includes the proposed increase in VAT rate, is part of a package involving several measures designed to reduce, and not to increase prices and therefore will not lead to inflation.
As at October this year, inflationary pressure of the country is at 33.88 percent after it slowed for two consecutive months in July and August.
There are four major bills including the Nigerian Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, the Nigeria Tax Bill, and the Joint Revenue Board Establishment Bill which form the reform initiatives of President Bola Tinubu.
They are all awaiting legislative action even as they carry the chances of reducing the tax burden for 90 percent of Nigerian workers and streamline tax administration.
The Federal Government and other stakeholders had said that if the reforms are implemented, they could provide the needed relief for low- and middle-income earners.
Part of the gains of the reforms are that they would reduce tax pressures, improve disposable incomes and consumer spending.
But various voices, especially from the Northeast and Northwest geopolitical zones, have expressed concerns about the impact of the tax reforms on economic equity and regional development.
Following the controversies that greeted the bill, the Senate announced their suspension and promised to amend any confusing areas.
