Nigerians are divided on the Federal Government’s plan to increase the Value Added Tax (VAT) to 10 per cent from the current 5 percent.
Some financial analysts agreed that the increment in the face of dwindling government revenue, saying the country has one of the lowest VAT among the comity of nations, while others vehemently opposed it, claiming it would add to the economic woes of Nigerians.
One of those who threw his weight behind the planned increment was Mallam Lamido Sanusi, Emir of Kano and former Governor, Central Bank of Nigeria (CBN).
According him, this should be part of the sacrifices that Nigerians have to pay to enable the government weather the economic storm that the country is presently going through.
“When Chief Awolowo introduced free education in the Western Region, it was free for the children, but it was not free for their poor parents.
They had to pay. Until you make that initial sacrifice and generate revenue, you will remain in a vicious circle.
You won’t be able to provide education, healthcare, employment etc.,” he stated.
Dr. Abiodun Adedipe, Managing Director, B.Adedipe Associate Limited also opted for the jerking of VAT by 100 per cent.
He posited that with the falling oil revenue, it is reasonable for the government to explore alternative sources of revenue and the increment of VAT could come handy in the short term.
The B.Adedipe Associate Limited boss added that with VAT at 5 per cent, Nigeria has one of the lowest rates in the world, so it won’t be out of place to up it to 10 per cent.
Mr. Samuel Ogungbesan, acting executive chairman, Federal Inland Revenue Service (FIRS) had recently disclosed plans to hike VAT, called sales tax in some climes, from the current 5 percent to 10 percent.
Value Added Tax (VAT) is a form of consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service.
Meanwhile, Mr. Emmanuel Oguntayo, Finance Manger, ECP Insurance Brokers, suggested that the government must first block leakages in its revenue collection process before thinking of jerking up any tax.
He claimed that if these leakages are blocked, there may be no need for the VAT increment.
“It is certain that government would rake in more revenue through the increment of VAT, because it is one area that anybody cannot run away from. If government is unable to properly monitor revenues as they come, increasing VAT would make no difference,” he averred.
But Mr. Charles Ogun, a financial consultant, was strongly opposed to the increment of VAT, saying any attempt to raise it would further impoverish Nigerians, who were already struggling to make ends meet.
“The Federal Government has not explored other avenues of generating revenue. I don’t believe in taking the easy way out.
Increasing VAT to 10 per cent will amount to opting for the easy way out of generating addition revenue,” he opined.
Mr. Ogun kicked against the increment of VAT because its burden would fall on the final customers.
“Even the company tax, personal income tax, petroleum profit tax etc. is the FIRS doing enough to collect them? The answer is no,” he enunciated.
Dr. Bonniface Chizea, Managing Director, BIC Consultancy Services,noted that the country’s net tax revenue to GDP is very low, far below that of many African countries.
“There is need for us to deepen our tax revenue. But having said that,there are many areas we can look at.
We have to spread the tax net to capture those who are not presently being captured,” he explained.
He noted that there many people in the informal sector who the FIRS is not capturing.