By Jonah Nwokpoku

An attempt to increase the value added tax by 10 per cent as announced by the Federal Inland Revenue Service, FIRS recently will lead to high inflation, further currency devaluation and eventual serious economic losses, said some technology operators who spoke to Vanguard on the matter. According to them, the increase will not only hurt the economy but result to higher cost of living and more revenue losses for government. They argued that the best option would be to expand the tax net and increase revenue generation instead of compelling some honest enterprises that are already paying to pay more.

Tax(VAT)

Speaking to Vanguard,  Founder/CEO of Hotels.ng, Mark Essien said: “I think that the focus of the government should be to encourage more economic activity, not less. I believe increasing the sales tax will reduce economic activity, and this will lead to overall less government earnings. In my opinion, it would be better the government focuses on a more efficient use of the capital it already has before taking moves that will reduce how much business transaction volume happens in the country.”

He added: “Small and Medium Enterprises, SMEs will be worst hit by the move, as it instantly increases their tax burden without a corresponding increase in improvement of government produced infrastructure. In my opinion, when SME’s do not have to pay for services that are to be government-controlled like electricity, then government can tax more. As it stands, such increases will simply lead to a price hike, which can lead to inflation and currency devaluation.”

Also speaking, Managing Director of Jovago.com, Marek Zymslowski said: “In an ideal world, raising taxes is rarely a good move for the business ecosystem. I do however understand the economic environment and limited time to use other solutions that the Federal Government is facing. I would just like to point out that raising taxes is not enough if it’s not followed by effective tax collection. We want everyone to pay taxes, not only the honest enterprises.

He added: “The  person that will pay the price of an increased tax is the customer. Most probably most SMEs will increase their rates by the increased level of the tax.” Also speaking, Managing Director, Carmudi Nigeria, Amy Muoneke, said:  “I understand why government would want to increase tax, to generate more revenue, yes.

But I think there are more  efficient  means of achieving the same goal, without increasing tax. One way is to focus on collection. If government focused on ensuring that citizens pay tax at the current percentage, this will definitely increase revenue. In my opinion, increasing tax is not a long term solution, a sustainable collection process is the key, if not you will just have more people dodging tax payment once it’s increased.”