Nigerians will henceforth pay more in taxes while electricity rates will also go up in the course of the year as a new law signed by President Muhammadu Buhari to boost revenue for government comes into effect.
The president yesterday signed the 2020 Finance Bill into law at the Presidential Villa in Abuja. This is coming nearly two months after the National Assembly passed the bill and forwarded it to the president for assent in November 2019. The law has paved the way for an increase of the Value Added Tax (VAT) from five per cent to 7.5 per cent.
Daily Trust reports that the 2020 Appropriation Act amounting to N10.59 trillion ($35bn) is also based on the new VAT rate.
Experts varied on the implication of the new charges with some saying more money for government will boost the economic potentials of the country and others saying the poor people are already overburdened.
A statement yesterday by the Special Adviser to the President on Media and Publicity, Femi Adesina, said with the assent, there will be more revenue to finance key government projects especially in the areas of health, education and critical infrastructure.
Buhari had first announced the signing for the bill into law through his Twitter handle @MBuhari saying the bill was vital to the implementation of the 2020 Budget.
The taxes that will witness noticeable increase include VAT, the Corporate Income Tax, and a plan to reintroduce tollgates taxes. The new law also stipulates that customers must present their Tax Identification Number (TIN) before they would be allowed to carry out any transactions through banks.
The new law also amended the Petroleum Profit Tax Act, Customs and Excise Tariff Act, Personal Income Tax Act, VAT, Stamp Duties Act and the Capital Gains Tax.
Electricity tariff may rise in first half of 2020
Economists contacted to comment on the new development say the increase in VAT and other taxes would cause discomfort to many Nigerians as the prices of goods and services will most likely skyrocket. On raising electricity rate from April 2020, the Nigerian Electricity Regulatory Commission (NERC) and the power Distribution Companies (DisCos) recently rolled out the tariff order which will be implemented by the first half of the year.
Analysis of the documents showed that on the average, the increase is between N15 to N20 for all the DisCos. However due to the shock this electricity rate could create, sources privy to the dealings of the tariff hike plan told one of our reporters that the Nigerian Electricity Regulatory Commission (NERC) recommended gradual increase starting from April (to be announced in the June tariff review).
The Minister of Power, Engr. Sale Mamman, had in a recent interview with Daily Trust said power supply was now private sector driven and that there was need for tariff that could cover production cost of electricity.
Communication tax underway in Nigeria
Daily Trust reports that there are moves to have legislative action to impose a 9 per cent tax on communication services. The communication service tax shall be levied on electronic communication services like voice calls, SMS, MMS, data usage both from telecommunication services providers and internet service as well as pay per view TV stations.
The federal government has also announced plans to ensure the return of toll gates on federal highways in the country, but experts believe it will result in increase in transport fare across the country.
– Daily Trust