Says it ‘ll weaken purchasing power, worsen poverty level
By Victor Young
Organised Labour yesterday rejected government’s plan to increase Value Added Tax, VAT, from 5% to 7.2%, describing the planned increase as anti-people and anti-development.
Speaking through the Union Labour Congress of Nigeria, ULC, Labour asked government to jettison the plan as it would not only weaken the citizens’ purchasing power, but also would worsen the poverty level in the country.
ULC in a statement by its President, Mr.Joe Ajaero, argued that manufacturers and businesses in attempt to recoup the extra cost as a result of the hike in VAT would dump it on the consumers and this would snowball into another round of increasing prices triggering another inflationary round that would ultimately undermine the economy.
The statement reads in part: “We are indeed worried that governance in Nigeria has rather become a tool for impoverishing the people rather than to make the lives and living of the populace more beneficial. The purpose of government we have always known is anchored on the drive to provide policies and programmes that are centred on the promotion of the welfare of the citizenry but one wonders why we have seen a continuous reversal of this fundamental pursuit of governance in Nigeria now and in the past
“ULC views this proposed hike as one of those actions of government that are not founded on making positive impacts on the lives of the masses of Nigeria. The consequences of this hike on the lives of Nigerians that are already suffering horrendous deprivations as a result of ill-thought out programmes of various governments is capable of exacerbating the poverty that has ravaged the peoples of our nation. We do not think that government realises the depth of misery that pervades our nation and may have completely detached itself from the people it ought to succour.
“Definitely, prices of goods and services will go up as a consequence with its attendant implications for cost of living pushing down further greater number of Nigerians into the cesspool of poverty. Manufacturers and businesses in attempt to recoup the extra cost as a result of the hike in VAT would dump it on the consumers and this would snowball into another round of increasing prices triggering another inflationary round that would ultimately undermine the economy.
“We do not understand why a nation that is already suffering huge effective demand gaps because of the prevailing low purchasing power of the citizenry would consider increasing consumption tax on the already depressed consumers? Why would the government be enamoured by the pursuit of increasing revenue to the detriment of the well-being of its own citizens? Or, what exactly is the policy objective – to emasculate the people more?
“ULC is worried that a government that has put all manners of challenges on the path to paying the new minimum wage of N30,000 to Nigerian workers would find it so easy to foist further hardship on the same workers and peoples. This proposal cannot find any reasonable explanation as it cannot be anchored on any plausible economic objectives. We had felt that the people are taxed more when the government has created the ambience for continuous wealth creation within the nation. It is the wealth created that is taxed but in this case we strongly believe that the government is trying to wring out of poor Nigerians that it has refused to govern effectively more blood from their already anaemic bodies. Is it not possible that government may just be putting the cart before the horse? You sow then you reap! It is not the other way round. If that is the case, we believe it will be counter-productive.