Business owners and financial experts have condemned yesterday’s passage of the Finance Bill which seeks to amend seven Acts of the National Assembly relating to taxes payable in the country.
The bill specifically seeks to hike the Value-Added Tax from five percent to 7.5 percent.
The Federal Executive Council had in September this year approved an increase in VAT and sent a bill to the National Assembly for consideration. President Muhammadu Buhari later on October 14 sent the bill to the legislature.
The bill was passed yesterday after a clause-by-clause consideration of the report of the Committee on Finance.
The chairman of the committee, Senator Olamilekan Adeola, said the bill specifically sought to amend Nigeria’s tax provisions and make them more responsive to the tax policies of the Federal Government, among other things.
He added that the amendment and the passage of the bill would enhance the implementation and effectiveness of government’s tax policies.
He said the initiative was to reform the tax system, adding that the proposed modifications to the fiscal rules around taxation were clearly aimed at creating an enabling business environment to minimize the tax burden for Micro, Small and Medium Enterprises.
Senate Minority Leader Abaribe Enyinnya and Senator Gabriel Suswan rejected the VAT increase, saying it would bring hardship to Nigerians.
Senate President Ahmad Lawan said the bill’s passage was not partisan, but purely intended to streamline the tax system in Nigeria and get revenue for government to provide services and infrastructure to the citizens.
But industrialists and experts rejected the idea of a possible increase in the rate VAT, saying it will add to the hardship of Nigerians.
The Director General of Manufacturers Association of Nigeria( MAN), Segun Ajayi-Kadiri argued that the increase is ill-timed.
He said whilst it is ostensibly aimed at increasing the revenue portfolio of government, it will impose significant burden on the private sector and on the average Nigerian.
He also said the effect on market operations, especially the informal sector, will also be high.
Similarly, the Director General of Lagos Chamber of Commerce and Industries (LCCI), Muda Yusuf said that the upward review of the VAT at this time will hurt businesses, the economy and citizens.
According to him, many businesses are currently grappling with high production and operating cost which has made sustainability difficult for many enterprises. He noted that there is also pressure of costs driven by high interest rate, huge logistics cost, high energy cost, and high regulatory compliance costs.
– Daily Trust