Nigerians Carpet Buhari, Warn against 10% Tax increment

Some Nigerians have reacted angrily to the plans by the federal government to increase Value Added Tax (VAT) from the current five per cent to 10 per cent, describing the move as insensitive to the plight of Nigerians already battling hard times.

Vice President Yemi Osinbajo had recently said that the current five per cent VAT rate in the country was very low, and went on to add that the Federal Government would increase the taxpayers’ base this year.

But Mrs Adebimpe Balogun, former president of Chartered Institute of Taxation of Nigeria (CITN), and Managing Partner, Saffron Professional Services, has faulted the move, saying the present economic situation in the country does not support such irrational development.

Governor Ayodele Fayose of Ekiti State, had earlier in April warned that said any increment in VAT or any other tax being paid by Nigerians at this time will further make life unbearable for the people.

“Nigerians are suffering and the little that they have, federal government is planning to take back through VAT increment, this is wickedness! Under three months, electricity tariff was increased despite epileptic power supply, N50 stamp duty was imposed on bank customers for money received into their accounts via electronic transfer, cash and cheques; petrol is being sold for as high as N400 per litre and now they are talking about increasing VAT to 10 per cent. This is the height of insensitivity to the plight of Nigerians,” Fayose said.

At the eighth Wole Soyinka Centre Media Lecture Series, themed: “Tax Education, National Development and the Seminal Role of the Media”, the issue of the proposed increment was raised again.

Speaking on ‘Falling Crude Prices: How can effective taxes help limit the hardship’, Balogun, who was the first female president of CITN, said that rather than increase taxes payable by Nigerians as being mulled by the federal government, government at all levels should broaden their tax base by bringing more people in the formal and informal sectors into the tax net.

She further called on the law makers and other highly placed government officials who earn heavy salaries to lead by example by paying taxes commensurate to what they earn.

While noting that lawmakers were not exempted, she called for a more sustainable and dynamic tax reform system.

She said: “Anybody that is thinking of increasing the VAT rate, is a suicidal attempt for our economy. Right now, people are suffering over the inability to pay for many tax required fees, ranging from the schools, rents, etc.

“This is not the time to start asking tax payers for higher rate. But rather it is the time to expand the tax base and the tax net, to capture those who are not in the tax net at the moment. We have a misconception about who are the informal sector stakeholders.

 The informal sector are not just the traders, or the ‘Balogun, Ojo market traders’, but rather those who do portfolio contracts and collect the juicy contracts from the government and are not charged adequately. The question I have for the Federal Inland Revenue Services, FIRS, is; to what extent are they using our withholding tax system to capture these people? This is because the federal government agencies that give out these contracts are obliged to withhold taxes. And so, how much of that do we leverage to be able to attract taxes from those informal sectors and not collecting much taxes from employees, though I am not saying that employees should not be taxed.”