VAT increase will deepen poverty, widen inequality, CSOs caution FG

A group of civil society organisations (CSOs) have urged the Federal Government not to follow through with the plan to increase Value Added Tax (VAT), saying that it will increase poverty and widen inequality.

It was reported that the CSOs were reacting to the recent announcement by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, that the Federal Executive Council had approved the proposal to increase VAT from five percent to 7.5 percent.

The CSOs, under the auspices of Tax Justice and Governance Platform, (TJGP) Nigeria, in a joint statement on Friday in Abuja, advocated for the promotion of a progressive, fair and transparent system in which domestic resources would be utilised for people-oriented development.

It was reported that the statement was made available to newsmen by Mr Chinedu Bassey, on behalf of the steering committee and members of the Tax Justice and Governance Platform

The CSOs in the Platform are Christian Aid, ActionAid Nigeria, Centre for Democracy and Development, Civil Society Legislative Advocacy Centre, OXFAM Nigeria and Imo State Tax Justice and Governance Platform.

“We call on the Federal Government to pay serious attention to widening the tax net rather than increasing the rate, which will only place more burden on the few that complies and still exempts the majority that do not pay taxes.

“If government wants to still go ahead with the increase, we expect empirical projections and evidence-based expected outputs to indicate that the tax yield from the increase will outweigh any disadvantage and potential negative impact.

“We also want the government to guarantee that majority of Nigerians will be the ultimate beneficiaries of the proposed measures,” they said.

The CSOs urged government to, in the meantime, reduce the tax incentives granted to multinationals and consider full digitisation of the processes of tax administration to curb leakages in the system.

They also called for the establishment of the beneficial ownership register in Nigeria as a measure of knowing people’s real worth and what they were expected to pay as tax.

“We call on the Federal Government to again beam its searchlight on illicit financial flows from Nigeria, as it represents a source of substantial revenue leakage and loss to government.

“We call on the Federal Ministry of Finance to ensure that the FIRS is not compelled to impose hardships on hapless Nigerians in a bid to generate taxes to meet unrealistic targets.

“The platform calls on the Federal Government to improve market information and transparency by implementing the National Tax Policy,” they said.

The group called on all Nigerians, especially civil society organisations, the media and labour, to continue to raise their voices against measures and policies that would further impoverish Nigerians.