The\u00a0Nigerian Senate\u00a0has rejected the Federal Executive Committee (FEC) proposed Value Added Tax (VAT) increase \u2013 from 5% to 7.5% \u2013 scheduled to take effect by January 2020. The decision was revealed by Senator Ali Ndume, Chairman of the Senate Committee on Army, after the\u00a0senate\u2019s plenary session\u00a0on Wednesday. Recall that last month, the Minister of Finance, Budgeting and Planning,\u00a0Mrs Zainab Ahmed announced an increase in Value Added Tax (VAT) on goods, from 5 per cent to 7.2 per cent. Upon its approval by federal lawmakers, the new VAT was scheduled to take effect in 2020. However, Ndume explained that the increase has been rejected because of its potential effects. He noted that it would ultimately discomfort the greater percentage of Nigerians as the prices of goods and services are bound to hit the roof. Meanwhile, the Senator has proposed a 9% tax on Communication Services like Data and SMS service. According to Ndume, the service tax would be levied on Telecommunication Services Providers and Internet Service. \u201cA 9% communication service tax shall be levied on such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations.\u201d Senator Ali Ndume, Chairman of the Senate Committee on Army The 9% service tax bill was introduced by Ndume at the plenary session on Wednesday and will now go for a second reading before being referred to the appropriate committee for further legislative action. https:\/\/twitter.com\/NGRSenate\/status\/1179351413706674176 The bill reads in part: \u201cThe tax shall be levied on Electronic Communication Services supplied by Service Providers. For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.\u201d Extract from Bill for an Act to establish the Communication Service Tax The Minister of Finance earlier clarified after the FEC meeting that increasing VAT was important because it would equip the State Governments with financial aid to pay the minimum wage. According to Ahmed, the FG would only retain 15% of the VAT, while 85% would go to the states and local governments. However, Ndume believes that increasing the Communication Service Tax is a better way of distributing wealth and lessening the burden on low-income earners.