VAT increase would deepen poverty – ex- Finance Minister

A former Minister of State for Finance, Dr Yerima Ngama, on Thursday warned that it is not justifiable to increase Value Added Tax (VAT) at a time Nigerians are bearing the brunt of daunting economic challenges occasioned by President Bola Tinubu’s fiscal reforms. The former ministers said this at the Public Hearing on Tax Reform […]

A former Minister of State for Finance, Dr Yerima Ngama, on Thursday warned that it is not justifiable to increase Value Added Tax (VAT) at a time Nigerians are bearing the brunt of daunting economic challenges occasioned by President Bola Tinubu’s fiscal reforms.

The former ministers said this at the Public Hearing on Tax Reform Bills organized by the House of Representatives Committee on Finance at the National Assembly Complex, Abuja, on Thursday.

Speaking on behalf of the Arewa Consultative Forum (ACF), Dr Ngama rejected the proposed VAT increase, inheritance law, scrap of TETFund, NASENI and NITDA, among others.

He said increasing VAT would amount “to punishing those paying VAT. The federal government should expand the tax net, not increase the tax.”

He said even if taxes are increased, the federal government agencies have no capacity to collect it.

“We should be talking about improving our capacity to collect the collectible tax, but not increase it. Of what importance is increasing the tax when you cannot collect up to 30 percent of it?” the former minister said.

He recommends retaining the current 7.5 percent VAT rate, citing the economic challenges facing citizens and businesses.

He said the association recognizes that the government needs to increase revenue, “but we also believe that the current VAT rate already places a significant burden on citizens and businesses.

“Increasing the rate further could have unintended consequences, such as reducing consumer spending and harming economic growth,” Ngama said.

On the issue of VAT distribution, Dr Ngama said the formula can be reached through political consensus, but not necessarily through a law.

“It is not everything that must be put in a law. The issue of VAT distribution can be determined politically — through a consensus between the federal, states and local governments,” he said.

He also recommends significantly reducing the powers attributed to the Chief Executive Officer and Chairman of the Board of Directors/Governance of the Joint Revenue Board.

Dr Ngama said the proposed legislation centralizes excessive supervisory and accountability powers in a single individual.

“The National Revenue Service chairman is too powerful. We know is a hardworking person, but the workload is too much for him. He appoints the coordinating directors, he chairs the board of NRS, that is too much for him.”

On inheritance law, he said the National Assembly should expunge the section completely and “allow states and local governments to determine that.”

He commended President Tinubu for creating livestock ministry, saying “the livestock minister should be given a target of establishing 40-world class ranches across the country before 2027.”