FG Plotting To Increase VAT Rate To 7.5 Percent From The Present 5 Percent By 2020 – Zainab Ahmed

FG Plotting To Increase VAT Rate To 7.5 Percent From The Present 5 Percent By 2020 – Zainab Ahmed

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Mrs Zainab Ahmed, A previous Minister of Finance, recently declared the federal government was conspiring to raise the rate of value-added tax (VAT) to 7.5 per cent from the present five per cent by 2020.

This is as the government attempts to shore up falling income, according to a report.

Addressing at the Bloomberg Emerging & Frontier Forum in London, the former minister, whose tenure completed with President Muhammadu Buhari’s first term on May 29, stated that her main absorption while in office was how to increase government’s revenue with only 55 per cent of marks being met.

Buhari, who was re-elected for a second four-year term, is yet to constitute a new cabinet.
She stated: “We have emerged a strategic income growth initiative, which we have started to execute.

“Our aim is to raise revenue to 65 per cent minimum in 2019 so that in the next three years we are capable to achieve 80-85 per cent of our income target.”

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Nevertheless, earlier plans by the government to increase VAT had been vehemently opposed by Nigerians.

In April, following a public backlash, Executive Chairman, Federal Inland Revenue Service ((FIRS), Mr Babatunde Fowler, refuted reports it had proposed a 50 per cent increase in VAT when he appeared before the National Assembly to defend the agency’s 2019 budget.

But Fowler maintained that his position was misrepresented as he actually recommended an increase in the number of Nigerians and companies paying VAT and not the other way around.

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A statement issued by his media department to debunk the claim stated: “Though he indicated that there should be an increase in the VAT rate by the end of the year, he never for once suggested a 50 per cent hike or any percentage increase at all.

“Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the service in 2018.

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“In 2018, FIRS collected the sum of N1.1 trillion in VAT; N1.42 trillion in Companies Income Tax (CIT); and N2.4 trillion in Petroleum Profits Tax (PPT).”

Also, Ebonyi State Governor, Chief David Umahi, had further opposed the proposed plan by the federal government to lift Value Added Tax (VAT) from five per cent to 35 per cent, stressing that it would put the country in difficult situations.

The governor had said that the plan, which was proposed by the federal government in order to pay workers’ salary with the implementation of the N30,000 minimum wage, was like digging a hole to fill a hole.

According to the National Bureau of Statistics (NBS), the federal government generated N1.10 trillion as VAT in 2018, representing a growth of 13.96 per cent (year-on-year) when compared to the N972.34 billion collected in 2017.

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