Civil Society Legislative Advocacy Centre (CISLAC), has rejected the proposed increase in the VAT rate, urging the Nigerian government to instead explore “more equitable” ways of raising tax revenues.
The Executive Director of CISLAC Auwal Rafsanjani made the assertion at the 2024 Annual National Tax Conference, themed “Economic Stabilization for Equity: Ensuring Fairness in Tax Policy”.
Rafsanjani revealed that “Increasing the VAT rate on non-essential items” in the current economic climate is unacceptable as the burden ultimately falls on low-income households who spend a greater share of their income on consumption.
With diminished purchasing power, skyrocketing food and transport costs, rising cost of rent and fuel, the proposed zero-rated VAT on these expenses will be countered by the simultaneous VAT hike on non-essential items, whose burden will still be borne by already impoverished Nigerians.”
On his part, the Chairman Presidential Committee on Fiscal Policy and Tax reforms, Taiwo Oyedele, called for “enhanced tax compliance” and “broadening of the nation’s tax base”, saying they were key pathways to achieving faster economic growth in 2025.
Mr Oyedele told the gathering that “the ongoing tax reforms would offer a pathway to accelerate growth and development as well as contribute to shared prosperity.
He explained that an average household in Nigeria will spend 82% of their income on these basic needs. So we decided to remove the VAT as much as possible,
“When we were done, we simulated this, and that meant about 60% drop in VAT revenue. Of course, one option is this, we wanted to be very popular, which is not our objective”.
Stakeholders, including Oxfam Nigeria, lauded the conveners of the Conference, saying it offers a platform for Stakeholders and taxpayers to interface and extensively deliberate in a manner that contributes to and complements several dialogues.
The Annual National Tax Conference is a yearly event which brings together critical stakeholders, government institutions and members of the public to discuss emerging developments in the tax and fiscal landscape of Nigeria and their implications for national development.
The 2024 edition, organised by Tax Justice and Governance Platform, Nigeria, with support from its partners, is coming at a time when the proposed Tax Reform Bills by President Bola Tinubu are generating heated controversy around the benefits or otherwise of the said Bills.
Olusola Akintonde
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