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FG Mulls 50% Hike in VAT, Others to Pay Minimum Wage

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  • FG Mulls 50% Hike in VAT, Others to Pay Minimum Wage

Minister of Budget and National Planning, Senator Udo Udoma, and the Chairman of the Federal Inland Revenue Service, Mr Babatunde Fowler, on Tuesday said the Federal Government was considering an upward review of the Value Added Tax by 50 per cent.

Udoma and Fowler who stated this on Tuesday when they appeared before the Senate Committee on Finance, said the increment was to, among others, enable the Federal Government to fund the new national minimum wage.

Fowler said the proposed payable VAT by Nigerians based on the increment would actually be between 35 per cent (6.75%) and 50 per cent (7.25%)

The government is currently charging five per cent VAT on all products in the country

Udoma and Fowler were among the heads of the Federal Government agencies, who were in the Senate to explain the detail of the 2019-2021 Medium-Term Expenditure Framework and Fiscal Strategy Paper, which is expected to be the benchmark for the 2019 budget deliberations.

Fowler, who said the FIRS’ goal was to achieve an N8trn revenue generation target this year, also said the 50 per cent increment would affect the Company Income Tax and the Petroleum Profit Tax.

He said, “By the end of this year, we should be ready for an increase in VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go on those trips. We should be ready for an increase on VAT.

“I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.”

Fowler added that his agency had collated the detail of 34 million Nigerians that were captured in the BVN network with a view to assessing their compliance with the tax laws.

He added that the FIRS raked in N3.1trn in 2016, N4.03 in 2017 and N5.32tn in 2018 even as he expressed the hope it would surpass past records in 2019.

Fowler said the agency had increased VAT collection by 25 per cent in the last three years, but lamented that many of the firms that were collecting VAT were not remitting it.

“Nigerians should be ready for an increase in VAT with at least by 35 to 50 per cent this year. Nigerians travel to other countries and they pay more on tax”

Udoma also told the panel headed by Senator John Owan-Enoh, that the Technical Advisory Committee on the minimum wage, would submit its report to President Muhammadu Buhari this week.

He said, “Recall that as a result of agitations from unions, the President set up a tripartite committee to look at the minimum wage.

“Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states, it is a tough time to review wages. But the N18, 000 is really too low and it is difficult for people to live on N18, 000.

“The President supported a review, but it is important that as we are reviewing (the minimum wage), we make sure that it can be funded that is why we set up the Bismark Rewane Technical Committee.

“We will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the minimum wage.

“So it is something we are going to work closely with the finance committee on how best this minimum wage will be addressed, both from the Federal Government and the states to ensure that the whole government apparatus is not just paying salaries and nothing else.

“It is important that we are able to pay the minimum wage and still have enough resources to do infrastructure. The committee has virtually completed its work”

He added that the Federal Government would intensify efforts in its assets recovery drive and would also challenge revenue generation agencies like the FIRS and the Nigeria Customs Service to boost their operations.

He also said efforts were on the way to ensure that capital projects and other sectors of the economy were adequately funded.

Udoma justified the benchmark recommended by the executive in the fiscal document and expressed confidence that necessary strategies were being employed to make them realisable.

The Federal Executive Council had in October last year, approved the MTEF/FSP and also proposed N8.73tn for the 2019 budget, which is N400bn lower than that of 2019, which is N9.12tn.

The Federal Government in the fiscal document, proposed an oil price benchmark of $60; oil production of 2.3 million barrels per day; exchange rate of N305 per US dollars; and Gross Domestic Product growth rate of 3.01 per cent.

Udoma said the expenditure aspect of the 2019 budget proposal in the MTEF/FSP was lower compared to the projection in the actual budget because of the hike in the police salaries that was later accommodated after the document had been submitted.

The Director General of the Budget Office, Ben Akabuese, while reviewing the performance of the 2018 budget, noted that it had achieved appreciable performance.

He also said that no specific revenue had been channeled to the Social Intervention Programme apart from the looted funds being recovered especially the popular ‘Abacha loot’.

The Chairman of the Senate Committee on Finance, Owan-Enoh, assured Nigerians that details of the senate version of the MTEF/FSP, based on the interactions with the officials, would be made known soon.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial market.

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Nigeria’s Main Refineries Record N406.62bn Loss in Two Years

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Port Harcourt, Kaduna, Warri Refinery posts N406.62bn Deficit in Two Years

Nigeria’s three main refineries recorded N406.62 billion loss in two years, according to the audited financial statements from the Nigerian National Petroleum Corporation (NNPC).

The three refineries located in Port Harcourt, Kaduna and Warri have a combined installed capacity of 445,000 barrels per day, however, the refineries have continued to function below the installed capacity.

The audited report showed the Kaduna refinery posted N64.34 billion loss in 2018, better than the N111.89 billion loss reported in 2017.

While Warri refinery filed N44.44 billion loss for 2018, also better than the N81.60 billion loss posted in 2017.

Port Harcourt refinery reported N45.59 billion loss in 2018, down from N55.76 billion loss posted in 2017.

The Nigerian government has spent billions of US dollars in maintaining and trying to improve the dilapidated refineries over the years. However, because of the inability of the three refineries to meet daily petrol demands of the Nigerian people, the Federal Government resulted to importation that has eroded the nation’s foreign reserves.

A recent report from the NNPC showed that Nigeria spent N2.37 trillion on petrol importation between May 2019 and May 2020 despite the nation struggling with falling foreign reserves due to low oil prices.

The weak foreign reserves has disrupted the nation’s economic outlook and weighed on the Nigerian Naira. The Naira has been devalued by 15 percent this year and was recently adjusted from N360 per US dollar exchange rate to N380/US$ for importers and investors to ease pressure on the nation’s foreign reserves.

Last week, at a summit organised by Seplat, Mallam Mele Kyari, the Group Managing Director, NNPC, said the three refineries were all idle despite the money being spent on them.

In Nigeria today, we are importing practically every petroleum product that we consume in this country.

“We are working to make sure that we are able to fix our refineries,” Kyari stated.

All hopes are now on Dangote’s refinery.

Aliko Dangote, Africa’s richest man and the world’s richest black man, is presently constructing a 650,000 barrels per day refinery.

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Osinbajo Says FG Plans to Create 5 Million Jobs

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FG to Create 5m Jobs from Strategic Investments in Manufacturing, Agriculture

Vice President, Prof. Yemi Osinbajo, has said the Federal Government plans to create at least 5 million jobs in the next few years.

Osinbajo, who spoke at the Virtual Presidential Policy Dialogue Session organised by the Lagos Chamber of Commerce and Industry (LCCI), said the Buhari-led administration is focused on job creation.

He, therefore, stated that this would be achieved with strategic investments in key sectors like the manufacturing and agriculture sectors.

The Vice President said, “We are to create jobs and boost our national housing programme. We would be intentional in the support of manufacturers in using our local raw materials. We are seriously engaging the use of cement in building our roads, as it will be cheaper for us and more durable.

“We are targeting electrification of five million households with solar power, and we are supporting SMEs, especially in the pharmaceuticals to enhance the production of personal protective equipment.”

Mrs. Toki Mabogunje, the President of LCCI, who also spoke at the event, expressed concerns over the failure of the Nigerian Customs Service to adhere to the Executive Order which forbids Customs checkpoints around the ports and within given geographical delimitations in the country.

She also noted the slow pace of reforms in the oil and gas sector, one of the nation’s main sectors. According to her, the oil and gas sector was another cause for worry, saying up till now the PIB passed has not been signed by President Muhammadu Buhari.

According to her, “Closure of the land borders has enormous implications for cross border economic activities around the country. The indications are now that the closure is indefinite. While we share the concern of government on issues of security and smuggling, we believe that the indefinite closure of land borders is not the solution to the problem.

“We are excited about the signing of the AFCTA. But we need to get ourselves ready for the pressure of competition inherent in the continental economic integration agenda. A number of commitments were made about the creation of an environment that would enable the private sector to be competition ready. But not much has happened in this regard so far.

“We are aware of the efforts of government to fix our infrastructure, including roads and railways, but funding has remained a major challenge. We would like to see a new funding model with much bigger focus on private sector capital within a Public Private Partnership [PPP] framework for infrastructure development in the country.

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Fuel Scarcity: NUPENG to Commence Strike on Monday

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Lagosians Should Brace for Fuel Scarcity as NUPENG Embarks on Strike

Nigerians should brace for fuel scarcity as the national leadership of the Nigeria Union of Petroleum and Natural Gas (NUPENG) directed all petroleum tanker drivers to withdraw their services from Lagos State starting from Monday, 10 August 2020.

In a statement released by NUPENG on Friday, the union said the directive followed the failure of various authorities in Lagos State to address three major issues that had impacted the operations of petroleum tanker drivers in the state for several months.

The statement signed by the National President, Williams Akporeha and the General Secretary, Olawale Afolabi, NUPENG and titled title ‘NUPENG leadership directs withdrawal of services by petroleum tanker drivers in Lagos State with effect from Monday, August 10, 2020,’ noted that members of the union are frustrated and pained by the barrage of challenges faced while carrying out their activities in Lagos State.

NUPENG said, “The entire rank and file members of the union are deeply pained, frustrated and agonised by the barrage of these challenges being consistently faced by petroleum tanker drivers in Lagos State and are left with no other option but to direct the withdrawal of their services in Lagos State until the Lagos State Government and other relevant stakeholders address these critical challenges.

“It is sad and disheartening to note here that we had made several appeals and reports to the Lagos State Government and the Presidential Task Force for the decongestion of Apapa on these challenges but all to no avail.

NUPENG listed the major challenges faced by petroleum tanker drivers in Lagos State as extortion and harassment by various security agents and, area boys’ (miscreants).

This menace must stop and the leadership of these security operatives in Lagos State must go all out to call their men to order with immediate effect.

The Union added that it is sad that the security agents who were expected to ensure the free flow of traffic and protection of road users were the same people using their uniforms and arms to intimidate, harass and extort money from petroleum drivers in Lagos State.

Therefore, it said it had embarked on an indefinite strike to force the Lagos State Government to address the situation.

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