Labour, Stakeholders Says no to 50% VAT Increase

  • 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.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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