Former Vice President Atiku Abubakar has warned that if the federal government carries out its plan to increase Value Added Tax (VAT) to 10%, it will throw Nigerians into more misery.
He gave the warning in a post on his verified X handle on Sunday, alleging that the action will be in line with the regressive and punitive policies of the present administration that have increased the cost of living.
Recall that Chairman of the PresidentialFiscal Policy and Tax Reforms Committee, Taiwo Oyedele, had said recently that his committee is proposing a law to the National Assembly to increase value-added tax from the current 7.5% to 10%.
Speaking in an interview, he stated: “We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis.
“When my committee was set up, we had three broad mandates. The first one was to look at governance: our finances as a country, borrowing, and coordination within the federal government and across sub-national.
“The second one was revenue transformation. The revenue profile of the country is abysmally low. If you dedicate our whole revenue to fixing roads it will be insufficient. The third is on government assets.
“The law we are proposing to the National Assembly has a rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.
“While we are doing that, we have a corresponding reduction in personal income tax. Anybody that is earning about N1.5 million a month or less, they will see their personal income tax come down. Companies will have income tax rate come down by 30% over the next two years to 25%. That is a significant reduction.
“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will go down to 2& in the next few years.”
But the presidential candidate of the Peoples Democratic Party (PDP) in the 2023 election was of the view that the relentless rise in taxes and interest rates has devastated businesses of all sizes and leading to job losses while intensifying the suffering of the poor.
He posted: “The increase in VAT is set to become the blazing inferno that will consume the very essence of our people.
“President Bola Tinubu, alongside his coterie of advisers, has resolved to raise the VAT rate from 7.5% to 10%, even as the NNPCL has announced a soaring PMS price increase at the pump.
“This move unveils a new era of regressive and punitive policies, and its impact is destined to deepen the domestic cost-of-living crisis and exacerbate Nigeria’s already fragile economic growth.
“President Tinubu and his entourage seem to be resorting to their familiar tactic: heaping burdens upon the impoverished while steadfastly ignoring their extravagant excesses! Tinubu’s actions reflect a profound insensitivity to the plight of the less fortunate as he indulges in the opulent renovation of villas and the acquisition of new jets and vehicles for himself and his family.
“One need not be an economist to grasp the ominous implications of President Tinubu’s ill-conceived policies for Nigeria’s future.
The relentless rise in taxes and interest rates has proven excessively onerous, debilitating businesses of all sizes and leading to job losses while intensifying the suffering of the poor. “The manufacturing sector, in particular, has endured relentless strife since Tinubu’s ascendancy, with its contribution to the GDP diminishing by over 20% since December 2023, as reported by the NBS.
“In early August, Tinubu turned his attention to agriculture. As is customary with this administration, a new policy was clandestinely formulated and announced, permitting duty-free importation of agricultural commodities such as wheat, maize, and paddy, despite vehement opposition from farmer groups nationwide.
“This policy poses a grave threat to Nigeria’s food security ambitions, as local farmers, facing unfair competition from low-cost producers in Asia, Europe, and America, are compelled to reduce or entirely abandon their production efforts.
“It jeopardizes job creation, wealth generation, and the sector’s long-term prosperity, casting a shadow over Nigeria’s sustainability and development.
“President Tinubu and his advisers would be wise to redirect their efforts towards crafting sustainable solutions to the systemic shocks afflicting the economy rather than compounding the crisis with measures destined to ignite further turmoil.”
