FG yet to harmonise discussions on palliatives for petrol subsidy removal —Minister

national economic council (NEC) for over a year on palliatives that will help to cushion the effects of the subsidy removal.

Membership of the NEC comprises the 36 state governors, the governor of the Central Bank of Nigeria (CBN), and other co-opted government officials.

However, he said the suggestions from the federal government and the governors were yet to be unified.

He explained that the situation requires time as it would affect the entire nation, adding that the committees wanted to ensure that every citizen was carried along.

Agba said the ministry of petroleum resources and other relevant agencies have also been working on the issue.

“For over a year plus now, the Vice President, Yemi Osinbajo has been leading a committee working on this and the National Economic Council also has a committee that has also been working on this,” he said.

“So, the stage that we are in now is how to finalize the suggestions that have come out from both the federal government and the governors’ side. Like you know, it is something that is going to affect the entire nation.

“They will just have to ensure that everyone is carried along, that is both the federal and subnational governments.”

Agba said the council also approved Nigeria agenda 2050 which aims to make Nigeria a high- income economy.

He said the initiative is designed to transform the country into an “upper-middle income country and subsequently to the status of highincome countries.

The plan aims to fully engage all resources, reduce poverty, as well as achieve social and economic stability.

Agba explained that the “Nigeria Agenda 2050 projects annual average real GDP growth of 7.0 percent”.

FG rakes in N10tn VAT under Buhari – NBS

The Federal Government has raked in N10.1tn from the collection of Value Added Tax under the President, Muhammadu Buhari.

This comes against the backdrop of the advice by the Minister of Finance, Zainab Ahmed, that the incoming government should increase the VAT from the current 7.5 per cent to 10 per cent.

VAT is a 7.5 per cent consumption tax administered by the Federal Inland Revenue Service when goods are purchased and services are rendered, and it is borne by the final consumer.

Revenue generated from VAT is usually disbursed to the three tiers of government through the Federation Accounts Allocation Committee.

An analysis of reports obtained from the National Bureau of Statistics showed that the VAT earnings continued to rise annually throughout the eight-year period.

The country earned N759.4bn in 2015, N777.5bn in 2016, N972.4bn in 2017 and N1.1tn in 2018.

VAT collections in 2019 amounted to N1.2tn, N1.5tn in 2020, N2.1tn in 2021 while N2.5tn was paid in 2022.

Economists have cautioned against raising the VAT from 7.5 per cent to 10 per cent by the incoming administration, as they argued that it would stifle the country’s economic growth.

The finance minister who made the call during a courtesy visit to the headquarters of Voice of Nigeria in Abuja recently, had said, “VAT is one of the ways to increase revenue and we still have to increase VAT because, at 7.5 per cent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world.

“In Sub-Saharan Africa, the African average is 18 per cent, when you increase your VAT, your Gross Domestic Product will grow.

“So, tax compliance has increased. As a result, we have also adjusted our VAT rate from five per cent to 7.5, even though our target was 10 per cent. But you know how it is in Nigeria, we are targeting 10 per cent by the second year, we did so to increase revenue.”

Reacting to this, the Director, Centre for the Promotion of Private Enterprise, Muda Yusuf, said the advice was coming too early considering the previous increase in 2020.

He said it was better to bring more people into the tax net than to impose more burden on those in the tax net.

He said, “The revenue performance from VAT has generally been excellent in recent years. My view is that it is perhaps too early to review it again, especially in light of all the challenges that businesses are facing.

“Businesses are the main contributors of VAT and there are some other taxes that have already been proposed under the finance bill like excise and telecom tax. So, we have to be careful so as not to increase the burden on businesses.

“The better thing is to bring more people into the tax net than to impose more burden on those in the tax net.”

On his part, the Chief Executive Officer, Cowry Assets, Johnson Chukwu, pointed out that the decision to review the tax should be taken by the new government.

He said, “The call is on the new government to decide how they want to review the taxing system and not on the current government to decide.

“We also have to look at how effective tax collection was and not about the amount received. One of the hallmarks of a good tax system is the ease of collection, low cost and convenience of payment.

“VAT is easiest to collect and difficult to avoid but it impacts consumption. Let us allow the new government to come and define their mode of collection.”