₦airaland Forum

The significant increase in Value Added Tax (VAT) collections in Q3’24 compared with the previous quarter partly mirrors the impact of the naira’s depreciation as well as the persistently high cost of living in the country, analysts at CSL Research have said.

The analysts stated this in a report which focused on the VAT report for Q3’ 2024 released recently by the National Bureau of Statistics (NBS).

Nigerians have, in the last two years, grappled with surging inflation, which recently hit a 28-year high, occasioned by factors such as elevated food prices, insecurity in agricultural regions, high input costs, supply chain disruptions from flooding and a persistent naira depreciation.

Dissecting the Q3’24 VAT data, the CSL Research analysts stated: “Data released by the National Bureau of Statistics (NBS) shows that aggregate Value Added Tax (VAT) for Q3’24 grew by 14.16 per cent to N1.78 trn from N1.56 trillion in Q2’24.

“A breakdown of the Q3 figures shows that local VAT payments amounted to N922.87 billion, a 16.44 per cent quarter-on-quarter (QoQ) growth.

Foreign VAT payments totalled N448.85 billion, rising by 13.42 per cent QoQ, while import VAT contributed N410.62 billion, showing a 10.10 per cent QoQ growth.

On a year-on-year (YoY) basis, VAT collections in Q3’24 surged by 88.00 per cent compared to Q3 2023. “The most significant YoY increases were recorded in foreign VAT payments (+119.40%) and import VAT payments (+85.46%).

Within the local VAT segment, mining and quarrying experienced an exceptional growth of +200.96 per cent YoY.

These figures reflect, in part, the impact of currency depreciation and the persistently high cost of living in the country compared to previous quarters.”

The analysts, who noted that VAT is a critical source of government revenue in Nigeria, as it has accounted for approximately 5–8 per cent of Federal Government revenue recently, also pointed out that with 85 per cent of VAT revenue statutorily allocated to state and local governments, it a key pillar of subnational financing.

Commenting on the raging debate over the VAT distribution formula contained in the tax reform bill proposed by the Presidential Fiscal Policy and Tax Reforms Committee, the analysts disagreed with the view that the proposed formula will significantly reduce VAT allocations to many northern states.

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The analysts said: “The new bill suggests a 60 per cent: 20 per cent 20 per cent t allocation formula among states based on derivation, equality of states, and population, respectively.

This contrasts with the current formula of 20 per cent, 50 per cent 30 per cent. Contrary to widespread concerns that the proposed changes would significantly reduce allocations to many northern states, we believe the impact may be less severe than anticipated.

Two key factors support this view: The proposed reduction of the Federal government’s VAT share from 15% to 10% would leave a larger pool of VAT revenue for distribution among the states (and) shifting from the current system where VAT is attributed to the states where payments are made to one that credits states based on where consumption occurs would ultimately increase the VAT revenue retained by states.”

ijustdey:
https://newtelegraphng.com/high-vat-revenue-reflects-naira-depreciation-rising-living-costs/?utm_source=rss&utm_medium=rss&utm_campaign=high-vat-revenue-reflects-naira-depreciation-rising-living-costs

OkCornel:
Toxic ripple effects of naira losing its purchasing power.

The government isn’t ready to cut down wasteful spending, and to maintain its wasteful spending in the face of declining purchasing power of the naira, the masses are the scapegoats to bear that brunt through increased taxation.

Nigeria is only for the elites and the influencers. Every other person can go to hell as far as the government is concerned.

IyaTola:


The reason the tax reform bill must be implemented otherwise, we would be running in circles.

Fiscus105:
The impact of Buhari cum Emefiele reign,
will be indelible mark on nation, till thy kingdom comes.

How I wish Buhari is Kirikiri maximum prison and suffer few years remaining for him on earth.

emmabest2000:
Story Story Story

Meanwhile.....

veraponpo:
Nigeria just needs to build our real economy by producing things we consume and if possible increase our export.

Once we can do that, the rate of inflation will go down and naira will appreciate in value. What we were having before was a cosmetic growth not built on the fundamental foundation of economic development. It was solely on crude export, fixed exchange rate that skewed towards the elite that had political influence thereby create arbitrage for only a select few. That was not sustainable which was why Nigeria could not meet with its obligations before

Our problem for a long time is the artificial growth we were having.

Let's produce food for our consumption and export, produce textiles we wear and if possible export. We need to reduce our consumption of foreign food and materials and encourage local production. Ina very short time, our economy will grow.

Simeon88:
We're just deceiving ourselves. We're actually retrogressing in term of purchasing power. The guys up there will do whatever it takes to maintain their lifestyle while the rest will need to keep thigthing their belt.

veraponpo:
Nigeria just needs to build our real economy by producing things we consume and if possible increase our export.

Once we can do that, the rate of inflation will go down and naira will appreciate in value. What we were having before was a cosmetic growth not built on the fundamental foundation of economic development. It was solely on crude export, fixed exchange rate that skewed towards the elite that had political influence thereby create arbitrage for only a select few. That was not sustainable which was why Nigeria could not meet with its obligations before

Our problem for a long time is the artificial growth we were having.

Let's produce food for our consumption and export, produce textiles we wear and if possible export. We need to reduce our consumption of foreign food and materials and encourage local production. Ina very short time, our economy will grow.

Irony1:
There was nothing like artificial growth here. What were are seeing is as a result of Tpain's wrong policy moves that eroded 70% of the value of the naira.

GboyegaD:
Do you blame the government who knows the people they govern are very stupid? Don't you see many stupid people attach sentiments even when they don't get to benefit anything from the situation. Reading through Nairaland should suggest the true picture of why the government deserves no blame in the real sense.

GboyegaD:
Stop blaming Buhari for the failure of the current administration. It is the height of irresponsibility.