Products tax in Nigeria rises to N1.36tn

Taxes on products in Nigeria rose to N1.36tn in the first six months of 2023, a National Bureau of Statistics report has indicated.

This is a 113.29 percent incrememt from the N636.19bn recorded in the first six months of 2021, and a 25.00 percent growth from the N1.09tn recorded in the corresponding period of 2022.

This is contained in the National Bureau of Statistics data on Net Indirect Taxes on Products and are based on current basic prices.

When adjusted for inflation, the taxes on products amounted to N465.94bn in the first six months of 2023, a 34.98 percent increase from the N345.19bn reported in the first six months of 2021, and an 11.94 percent increase from the N416.23bn recorded in the corresponding period of 2022.

According to the World Bank, net indirect taxes (taxes less subsidies on products) are the sum of product taxes less subsidies. It stated that product taxes are taxes payable by producers as they relate to the production, sale, purchase, or use of the goods and services.

However, the rise in product taxes year-on-year comes despite falling purchasing power in the country with inflation hitting 22.79 percent in June.

According to the World Bank, the loss of purchasing power from high inflation has pushed about four million Nigerians into poverty between January and May 2023.

Inflation is expected to continue to rise and is predicted to hit 25 percent by 2023. The global bank said, “Headline inflation is expected to rise from 18.8 percent in 2022 to 25 percent in 2023.”

Meanwhile, the International Monetary Fund has urged Nigeria to raise its VAT rate to 15 per cent by 2027, which could further increase the amount generated from product tax and increase the prices of products.

But the government says it is bolstering effort to shore up revenue. In its 2023-2035 Medium Term Expenditure Framework and Fiscal Strategy Paper, the government disclosed some of its strategies adopted to achieve this.

“These measures include; improving the tax administration framework, including tax filing and payment; as well as introduction of new and/or further increases in existing pro-health taxes like excise on sugar-sweetened beverages, tobacco, and alcohol.”

Mixed reactions have however greeted the implementation of these measures.

NBS/Punch/Hauwa Abu