Experts and groups such as the Nigeria Employers’ Consultative Association have said the recent increase in the Value Added Tax rate from five per cent to 7.2 per cent will lead to closure of many businesses.
The Head of Tax and Corporate Advisory Services at PricewaterhouseCoopers, Taiwo Oyedele, said the new VAT rate would shrink the GDP growth and disposable income of Nigerians.
The Director-General of NECA, Mr Timothy Olawale, noted that the timing of the increase in VAT rate was wrong, stressing that the government ought to support businesses in reducing the alarming unemployment rate in the country.
Recall that the Minister of Finance, Budget and National Planning, Zainab Ahmed, on Wednesday announced the VAT rate increase at the end of the Federal Executive Council meeting.
Olawale, however, argued that the benefits of the recently signed national minimum wage of N30,000 would be neutralised by the proposed increase in the VAT, thus further reducing the purchasing power of the citizens.
Olawale, who said that in the event that the government must increase VAT rate against the will of the people, it should have been limited to luxury or ostentatious goods.
He also urged the government to double its efforts at expanding the tax net, reduce the income gap and improve the economy through more friendly fiscal policies and promote the ease of doing business in Nigeria.
Oyedele of the PwC in a statement on Thursday said more people were likely to evade tax payment as businesses would become less competitive.
Source: Punch Newspaper
