By Gabriel Ewepu – Abuja
Civil Society Organisations, CSOs, under the auspices of The Tax Justice and Governance Platform, TJGP, Nigeria, Friday, kicked against and cautioned the Federal Government over a proposal to increase Value Added Tax, VAT, from 5% to 7.2%.
This was contained in a statement signed by the Communication Director, Action Aid Nigeria, Lola Ayanda, where the CSOs stated that the federal government should pay serious attention to widening the tax net instead of increasing the rate which will only place more burden on the few that complies already and still exempt the majority that does not pay taxes.
TJGP Nigeria is a group of civil society organizations advocating for the promotion of a progressive, fair and transparent system in which domestic resources are effectively mobilized through an efficient tax system, utilized for people-oriented development and provision of essential services that benefit the majority of citizens, including the poor and disadvantaged groups.
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The statement reads in part, “We have followed with keen interest, the trend around the Federal Government’s effort to improve revenue mobilization to fund development in Nigeria.
“There have been diverse’ views from different interest parties on which measures will be more strategic and sustainable. Finally, the minister of finance announced an increase in the VAT rate at the last Federal executive council held on the 11th of September 2019 after several denials of the possibility of an increase in VAT in Nigeria.
“We want to state our position for advocacy and campaign which is that Government designs and implements policies and programmes that enhance the welfare of the poor and protects disadvantaged groups that constitute much of the Nigerian population and address issues of inequality.
“As has been demanded by many Nigerians and groups, we call on the federal government pay serious attention to widening the tax net rather than increasing the rate which will only place more burden on the few that complies already and still exempt the majority that does not pay taxes.”
According to the group, there are still myriads of companies and other taxable entities in Nigeria who are not in the tax net and still not convicted or punished in any way.
“We welcome the VAIDS is an opportunity to increase the tax net, though it has not yielded the optimum result expected. There are still myriads of companies and other taxable entities in Nigeria who are not in the tax net and still not convicted or punished in any way.”
The group also raised grave issues on implications of VAT increase with these questions, “Given the implication of increasing the VAT, we would want the FG to consider following issue areas; Who bears the burden of the tax increment? What main drivers could inform and/or justify the decision for a VAT increment?
“What are the real issues around VAT: Remittance (collection) or Rate? How well has the little been used and what are the assurances that an increase would alleviate economic conditions? What systematic measures have been taken to ensure tax compliance? Are there no other options available to the government to mobilize revenue?”