Recently, to the glooms of the consumers, the Nigerian Federal Executive Council (FEC) approved FG’s plan to increase Value Added Tax (VAT) rate from the current 5.0% to 7.5%, by 2020. This is to help the Federal Government (FG) shore up its weak revenue base. However, as President Buhari prepares to the present the 2020 finance bill to the National Assembly, news report has shown that the lawmakers are not in favour of the proposed VAT increment, saying it could inflict more hardship on Nigerians.
Elsewhere, the lawmakers showed support for the proposed charge for communication services usage. This was as the Communication Service Tax (CST) bill of 9.0% passed its first reading at the Senate, last week. Thus, we ask “are the legislature really fighting for the interest of the masses?”
In our opinion, the proposed CST is expected to have a similar impact on consumers wallet, to the proposed increment in VAT. More so, communication and internet connection now ranks along with other physiological necessities such as food, clothing and shelter. Additionally, many individuals; micro and small businesses rely on data and telecommunications services for survival. In all, while we believe the FG needs to ramp up its revenue base by expanding its tax net, we do not believe introducing new types of tax will necessarily amount to more tax revenue for the government especially as citizens are yet to see the impact of the prior tax being paid.
United Capital Research