The Federal Government on Tuesday unveiled its Economic Recovery and Growth Plan after consultations with stakeholders from both the public and private sectors of the economy.
The plan includes raising the Value Added TAX (VAT) rate on luxury items from current 5% to 15%. The Government is projecting raising N350bn through the increase in VAT rate on luxury items and improvement in company’s income tax, which would commence in 2018.
The former administration of President Goodluck Jonathan had in 2014, while mulling austerity measures meant to generate additional funds for the Federal Government identified some items that were to be taxed as luxury goods to include champagne, alcoholic beverages, private jets, luxury cars based on engine capacity, and yachts.
The current Government of Muhammadu Buhari said it would increase non-oil tax revenues by improving tax compliance and expanding the tax base by using appropriate technology, tightening the tax code, as well as taxing luxury items and other indirect taxes with the aim of capturing a wider share of the non-formal economy.
According to the released document, the Government is targeting real Gross Domestic Product (GDP) of N81.38tn by 2020.
The content of the document which was released by the Ministry of Budget and National Planning contains the economic blueprint of the government for the three-year period, 2017 to 2020 and is meant to get the country out of recession.