The Nigeria Employers Consultative Association, NECA, has opposed the call by President Muhammadu Buhari for state governments to increase Value Added Tax, VAT, in an attempt to increase their Internally Generated Revenue, IGR.
NECA, Director-General, Timothy Olawale at the just concluded 108th session of International Labour Conference, in Geneva, Switzerland, argued that state governments could not unilaterally increase VAT without an amendment to the VAT Act 2007, at the National Assembly.
He said: “The president meant well by urging state governments to increase their Internally Generated Revenue (IGR). Considering the reported over N2 trillion in bail-out funds to many of the states, it was apt for the president to advise them to be innovative in increasing their IGR and at the same time prudent in their expenditures.
“However, the call for increase in VAT or any other form of tax as a way to increase IGR at this time is not only misplaced, it will do more harm to the already burdened private sector and further impoverished citizens that the President promised to take out of poverty.
“Also, state governments cannot unilaterally increase VAT without the amendment of the Value Added Tax Act at the National Assembly. The common man will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb.
the way out for the state governments is: “an aggressive taxpayer enlightenment
and expansion of the tax net to capture more citizens as it’s been posited,
arguably that less than 40 percent of Nigerians are tax compliant. Secondly the
states should put mechanisms in place to eliminate leakages as a large chunk of
the IGR realized does not find their way into government coffers. Finally as
reiterated over and over again, they should drastically cut the cost of