- Reps Kick Against VAT Increase
Members of the House of Representatives on Monday criticised the Federal Government plans to increase the nation’s Value Added Tax from the current 5 percent to 7.5 percent.
The lawmakers said the bill scheduled for second reading this week will create more problems for the masses.
This was the same controversial bill that passed second reading at the Senate last week despite lawmakers’ objection.
Mr Richard Gbande, the Deputy Chairman, House Committee on Commerce, argued that the increment would hurt small and medium businesses and make life difficult for the poor.
Gbande, who is representing Katsina Ala/Logo/Ukum Federal Constituency of Benue State, stated that “We will always go with the masses. Our most important decision will be to see that we reduce the suffering of the masses. We don’t even need a soothsayer to tell us that our people are suffering. There is hunger and starvation in the land.
“The Committee on Commerce we will look at it; we will look at it holistically.
“We will be very objective and if the decision will cause more harm than good, then, we will advise them to put it on hold for now until a time when the people are happy and the economy has actually improved.”
Mr. Bamidele Salam said if the proposed increase would be limited to only luxury items, he would support it.
He said, “Consumption tax is a very good means of generating revenue for any country, but it has to be on luxury items. Those who want to drink Champagne or Brandy and other luxury items should pay nine per cent or more.”
The lawmaker added, “The other issue has to do with the distribution of (revenue from) VAT; that is where I am actually concerned. VAT is a consumption tax and I think 80 per cent of VAT (revenue) should be domiciled in its place of origin. The present system, to me, is unjust; where you take VAT to a central pool and then use one nebulous formula to share it. It is unjust.
“It is a consumption tax and 80 per cent of it should be domiciled in the place of consumption and 20 per cent should be remitted to the federal purse to be shared. The 80 per cent should remain in their state of origin so that those who want to take beer and pay VAT on it should use the proceeds to develop their states. Those who have banned beer, cigarette and every other things should not benefit from the proceeds of VAT.”
Mr Toby Okechukwu, the Deputy Minority Leader, explained that, “Bringing the Appropriation Bill before submitting the bill on VAT is like putting the cart before the horse. The bill should have been brought earlier so that it could constructively be part of the budget. If the National Assembly refuses it, it means that the cash flow expectations of the government will not be in place.
“Presumption (that the bill would be passed) is part of the expectation of the cash flow, but it should not include an enabling law that would allow you to implement it. You don’t make presumptions for a law; you make presumptions for expected income. If they make presumptions on law, it is wrong.”