Against the President Muhammadu Buhari’s advice to state governments to increase Value Added Tax (VAT) in an attempt to shore up their revenue, the organized private sector (OPS) has tasked the states to enlighten the masses.
The Nigeria Employers Consultative Association (NECA) advised the state governments to engage in aggressive taxpayer enlightenment as well as the expansion of their tax net to increase their internally-generated revenue (IGR).
NECA disclosed that increasing value-added tax at this time in order to increase state revenue was not only a misplaced priority but would further impoverish citizens that Buhari promised to take out of poverty as well as do more harm to the already burdened private sector.
NECA’s director-general, Timothy Olawale, disclosed this at the International Labor Conference (ILC) in Geneva, Switzerland, saying the President meant well by urging state governments to be innovative in increasing their IGR, and at the same time prudent in their expenditures; he also argued that state governments could not unilaterally increase VAT without the amendment of the VAT Act at the National Assembly.
According to Timothy, it was the common man that will definitely be at the receiving end of any increase in VAT.
In his words: “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”.
Proposing a way forward, Timothy said both federal and state government must engage in aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens, stating that less than 40 percent of Nigerians are tax-compliant.
He advised that different states in Nigeria should put mechanisms in place to eliminate leakages, as a large chunk of the IGR realized does not get into government accounts.
Timothy further advised governors on reduction on the cost of governance, while several unnecessary retinues of aides kept by them at a prohibitive cost to the State are needless.
Advising further, Timothy said: “Besides, an ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by State government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses
“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 an 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.”