Zainab Ahmed, the Minister of Finance, Budget and National Planning,, has urged the incoming administration to increase the Value Added Tax (VAT) from the current 7.5 percent to 10 percent, saying this would stimulate the country’s economic growth.
The minister who made the call during a courtesy visit to the headquarters of VON in Abuja, said: “VAT was one of the ways to increase revenue and we still have to increase VAT because at 7.5 per cent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world. In Sub-Saharan Africa, the Africa average is 18 per cent, when you increase your VAT, your Gross Domestic Product (GDP) will grow.”
According to Ahmed, the government had used the finance bills to block leakages, strengthen the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service, adding that the government has also done automation of the two institutions through the process.
The minister also disclosed that the federal government would remove the controversial petrol subsidy before the end of President Muhammadu Buhari’s tenure on May 29, 2023.
Ahmed attributed the delay in removal of the subsidy, as provided for in the Petroleum Industry Act (PIA) 2021, to the 2023 general election and the forthcoming national population census.
But the federal government, on Wednesday, disclosed that no conclusion had been reached on how to mitigate the effect of the proposed fuel subsidy removal on the citizens.
She added that the subsidy cost per litre of petrol ranged between N350 to N400, maintaining that Nigeria spends about N250 billion monthly on subsidy.
She said subsidy removal was a difficult political and economic decision for the government to take. But the minister said almost everyone had now agreed that subsidy was not serving the people it was supposed to serve and its high cost was adding to government’s deficit.