5% Value Added Tax too low – Osinbajo
April 8, 2016

’Femi Asu

Vice President Yemi Osinbajo has described the current five per cent Value Added Tax rate in the country as very low, adding that the Federal Government would increase the taxpayer base this year.

Osinbajo stated this on Thursday in Lagos in a keynote address at the 1st National Forum on the Economy organised by Vintage Press Limited, publishers of The Nation Newspapers.

VAT is a consumption tax payable on goods and services consumed by individuals, government agencies and business organisations.

The International Monetary Fund had last week reiterated its advice to the Federal Government to increase the VAT rate gradually.

The Managing Director of the fund, Christine Lagarde, had in January during her visit to Nigeria, urged the government to increase the VAT rate.

“To move the nation forward, we must move beyond oil. The reality is that while oil accounts for 14.4 per cent of our Gross Domestic Product, it continues to be the source of 90 per cent of official foreign exchange earnings; and prior to this year, up to 76 per cent of government revenues,” Osinbajo said.

He said having an easy source of revenue had denied Nigeria the opportunity to engage in critical thinking to develop the economy.

“In order to move forward, we must reduce the current dependence of the federal and state governments on the ritual sharing of revenues from oil. Doing so requires broader and genuine efforts at the diversification of our economic structures in terms of drivers of economic activities. The foundation for a strong economy requires that we have appropriate fiscal policies,” the vice president explained.

Noting that the country had a very low rate of VAT of five per cent and a low taxpayer base, Osinbajo said, “We are focused on increasing the taxpayer base in the first instance this year.”

“At the federal level, implementation of the budget will stimulate the economy rather than impose undue austerity. Accordingly, up to 30 per cent of expenditure has been devoted to capital spending and N500bn for social intervention, which will create jobs directly and indirectly, while also boosting demand.”

According to him, non-oil sources, comprising mainly Company Income Tax, VAT, and customs and excise duties are expected to contribute about N1.5tn, which is more than oil-related revenue estimated at about N820bn.

“This is unprecedented in a long while in our nation and is a near complete reversal of the previous ratio of oil to non-oil revenues. These are bold and clear indications that the Buhari administration is serious about change,” he said.

The vice president noted that the way forward was for the nation to move from reliance on crude oil to the production of petroleum products.

Osinbajo stated, “By this, I mean that instead of merely extracting and exporting crude oil, Nigeria must now take full advantage of the petroleum sector and its entire value chain. This will mean refining our crude before it is exported; it will entail becoming an African regional petrochemical hub.

“It will also require making full use of our natural gas resources domestically and abroad; and it will require that we fully implement local content laws and regulations in the oil sector so as to fully utilise its abundant forward and backward linkages.”


http://www.punchng.com/5-value-added-tax-too-low-osinbajo/

Keep on collecting everything without provision of amenities for your citizen.

Mod don't remove my comment ooo.I know my position already.

Hmmmmm

Osinbajo mind your sef oh! has FIRS finished collecting the 5%? Nigerian economy is less than 20%. tax compliant which is very dissapointing.I can imagine the billons the government loses to tax evasion in this country.

They want to increase VAT too!?!?!?

Can life get any harder for the average Nigerian?

Hmmmmm i smell political unrest

FTC...let's hope this makes fp


but seriously, I don't know if increasing VAT which will automatically increase price of things have a corresponding +he effects on citizenry.... all the country's amassed resources has been used up by just few persons...
#Godhavemercy

What an inspiring message for Nigerians who have to close their shops so they can sleep on queues in order to buy petrol at N300 per liter.

But actually it seems that the title of this article deliberately twisted what Professor Osinbajo said. The article only says he said IMF suggested it.

Seun:
What an inspiring message for Nigerians who have to close their shops so they can sleep on queues in order to buy petrol at N300 per liter.

But actually it seems that the title this article deliberately twisted what Professor Osinbajo said. The article only says he said IMF suggested it.

The only fiscal policy that this administration likes it to Increase tax. They dnt talk about how they themselves can curb excess spending in their govt.....They are so clueless on how to generate revenue. The only way they know how to make money is by taxing the populace even more. Shame!

How about they try implementing effective tax collection at the existing rates first before talking about an increase eh

The only way tax increase will be justified is when the government close all the loopholes that aid illicit financial flows out of the country. We can't be paying taxes for some few bureaucrats to be piling up for their future generations.

woooooow is 97p okay? not all oyino policies cn wrk in nigeria or africa yu know

UjSizzle:
How about they try implementing effective tax collection at the existing rates first before talking about an increase eh

The only way tax increase will be justified is when the government close all the loopholes that aid illicit financial flows out of the country. We can't be paying taxes for some few bureaucrats to be piling up for their future generations.

Well the maths might look favourable (Obviously) but the implementation and the cost of chasing the non compliant might be counter productive.

Think about this for a second, IF they increase VAT and the big multinationals continue to be compliant, wouldn't that result in an immediate increase in revenue since the increase will be passed to the consumers.

him papa Dia, he no well. clueless and bunch of nonentities. this is d change dey promised. let them make it 50%. Fool claiming professor.