By Muyiwa Olayinka
Last week in a rare bold move, the Nigerian Senate passed the Finance Bill Act of 2019 into law. The bill which was presented to the National Assembly by President Muhammadu Buhari in October, seeks to increase the value-added tax (VAT) from five per cent to 7.5 per cent.
If signed into law, Nigerians will pay more for specific goods and services that attract VAT. Also the bill will also reform the tax regime by amending several Acts, namely Petroleum Profit Tax Act (PPT), Custom and Excise Tax Act, Company Income Tax Act (CITA), Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act, and Capital Gains Act.
This bill is not by accident or through a default; it was prepared by the Ministry of Finance as a proposal to Mr. President, and was presented as part of the budget estimates of 2020. Buhari announced it in his presentation of the 2020 budget estimate that will increase 7.5% Value Added Tax (VAT) from 5%. According to the President, the additional revenue to be generated from the higher VAT rate would be deployed to the health and education sectors as well as the various infrastructural development programmes.
I’m more concerned about the VAT increment because it’s going to affect all Nigerians, especially the masses that are currently bogged down by recession.
The definition meaning of VAT has to be explained so that the masses will understand the implications of this increment. A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. It means VAT is charged on goods and services consumed by all Nigerians, invariably, prices of goods and services will increase, including transportation. If N50 was charged as VAT, it is going to be N75 with the new law.
It means more money for all tiers for government (Federal, state and local governments) and the masses will bear the brunt and worse off, because they will need to pay more.
Expectedly, the Governor’s forum defended the increment: Vice-chairman of the Nigerian Governors Forum (NGF) and Sokoto State Governor Aminu Tambuwal disclosed that they supported the bill at the NGF monthly meeting in Abuja. He said: “We are in support of that bill. We are in support of what will definitely improve revenue generation for the Federal Government and states.
This has been the lame excuse of this government since 2015, but unfortunately, the reverse is the case. The Buhari led government has been increasing taxes and levies on Nigerians, but sadly they have little to show for increased revenue. Why is this government is fond of taking more and more from Nigerians and not giving back?
The government claimed it has recovered huge sums of monies from corrupt Nigerians but our infrastructures are in dilapidated states. Our roads are death traps nothing to show for the improved revenue; the much touted railway modernization projects are still not in advanced stages.
This government has not added additional 1MW to the national grid since it came on board but the network has continually suffered many uncountable systems break downs. No portable drinking water as many Nigerians have become government unto themselves: providing electricity, digging boreholes to get water and providing security to secure lives and properties.
This government has been robbing Peter to pay Paul. Our political leaders are living in opulence while the majority are faced with a bleak future
Recently an ex-Governor of Zamfara state Yari, a bandit ravaged state, wrote the current Gov Mutawale the need to approve and pay his monthly pension of N10m, while many state Governors could not pay the minimum wage of N30,000 for civil servants.
If this bill is signed to law by Mr. President, there will be more money to feather political nests, satisfy the unquenchable greed of our political leaders and encourage waste of public funds, to the detriment of the masses.
Nigerians should wake up from their slumber and ask the offensive aspect that deals with VAT to be reversed to status quo ante, or be expunged, or resist the bill in its entirety.