By Dapo Akinrefon

THE umbrella body for all Yorùbá groups, The Yorùbá Summit Group, yesterday, flayed the recent increase in the Value Added Tax, VAT, saying the increase is not sustainable and would not augur well for the nation.

In a statement by Publicity Secretary Yoruba Summit Group and Chairman, Steering Committee of Yoruba Summit Group, Mogaji Gboyega Adejumo and Dr. Olufemi Adegoke respectively, the body argued that the figures for VAT “have long exposed the contradictions in the Nigerian federation, where states that produce the wealth that continues to sustain the country hardly benefit from the distribution.”

The group comprises Afenifere, OPC, Voice of Reason, Yoruba Unity Forum, Yoruba Elders Council, Yoruba Youth Council, Yoruba Patriots Movement, ASHE Foundation Oodua women advocacy, Yoruba Council of Youths Worldwide, Egbe Omo Odùduwà ti North America, International Centre for Yoruba Arts and Culture, Okun Development Association and Atayese.

The statement reads: The Yorùbá Summit Group has deemed it fit and proper at this crucial period in our history, to address the crucial issues relating to the way and manner of VAT Administration.

“Figures for Value Added Tax, VAT, as released by the Buhari government in 2017, which we believe have not significantly changed in recent years have long exposed the contradictions in the Nigerian federation, where states that produce the wealth that continues to sustain the country hardly benefit from the distribution.

“Just as it is evident in the matter of how the country’s oil resources, are also distributed, the recent increase in VAT is yet again another case of Monkey dey work, Baboon dey chop.

“Many states get money simply for contributing practically nothing. As revealed recently by notable persons from the northern parts, the northern states of 19 as against the southern states of 17, produce just about 18% of our total GDP, producing still a whole lot less about in VAT percentages.

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“According to former Finance Minister, Kemi Adeosun, Lagos State alone, was generating 55 per cent of the VAT collected in the country, as at the year 2017.

“With yet another increase in VAT rates, we the undersigned, on behalf of our various organisations have concluded that Yoruba must take a stand regarding the matter of VAT and VAT increases.”

“Last week, the Federal Government released a statement on the plan to increase the Value Added Tax rate (VAT) from 5% to 7.5%, a proposed 50% per cent increase.

“Some have said that the increase is justified because the rates applicable in other jurisdictions is as high as 20% in the EU, and averages 19.3% amongst OECD member States (although it could be as low as 7.7% in Luxembourg).

“Others have also argued that increasing the VAT rate is a means of shoring up the revenue base for the three tiers of government so that they would be able to meet the minimum wage obligations since contrary to expectations, the mid-year review of the 2019 budget performance showed that VAT collections fell by 15% when compared with 2018 due to insecurity in the country leading to falling in industries’ capacity utilisation with a knock-on effect on consumers’ purchasing powers. However, we need to understand how VAT works.

“Wherever VAT is collected, ultimately it is the final consumer that bears the burden which, when added together, will equal an effective rate of exactly 5% of the final price paid. This is what is known as income.”

On how the Federal Government can achieve an equitable VAT regime, the group said: “Government can generate additional revenue to plug the holes in public finances occasioned by the falling VAT receipts by first adequately policing the incredibly porous borders of the northern parts.”

VANGUARD