By Miracle Ogunde
The Federal Government’s move to increase Value Added Tax (VAT) from the current 7.5% to 10%, 12.5% and finally to 15% as proposed in one of the tax reform bills, has been faulted by the Trade Union Congress (TUC).
The union said increasing VAT would place an additional financial burden on Nigerians, who are struggling with economic challenges.
In a statement on Tuesday, TUC President Festus Osifo said “allowing VAT rate to remain at 7.5% is in the best interest of the nation, as increasing it would place an additional financial burden on Nigerians, many of whom are already struggling with economic challenges”.
“At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power,” he said.
The union also said the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFUND) have greatly impacted the country through their respective mandates.
“Both have respectively been instrumental in improving our tertiary education and the adoption of homegrown technologies to enhance national productivity and self-reliance. Their continued existence is vital for sustaining progress in education, technology, and economic development across the country,” the TUC added.
The TUC said it welcomed the inclusion of the derivation component in VAT distribution amongst the three tiers of government.
“When passed into law and properly implemented, it will encourage productivity at the sub-national level thereby move us gradually from a total rent-seeking economy to a derivation-based system that will stimulate economic activitie,” Osifo said.
“However, we still have two items that we strongly believe should be reviewed in the tax bills that will immensely benefit Nigerians:
“The threshold for tax exemptions should be increased from the current ₦800,000 per annum, as proposed in the bill, to ₦2,500,000 per annum. This will provide relief to struggling Nigerians within that income bracket, easing the excruciating economic challenges they face by increasing their disposable income.
“The proposed bill assigning royalty collection to the Nigeria Revenue Service (NRS) appears beneficial on the surface but would most likely result in significant revenue losses for the government.”
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