Public affairs analyst, Makut Macham, has described the planned hike in Value Added Tax as a hole being dug by the Nigerian Government, which will cause inflation at the end.

The government had stated that there will be an increase in the VAT from its current rate of 5.5 per cent to 7.2 per cent.

It also said there will be a 0.005 per cent tax on the profits of companies to be set aside for the Police Trust Fund.

The move is expected to generate more revenue for the government.

Macham, who spoke with SaharaReporters on Wednesday, said although it looks attractive, the policy would in the long term affect ordinary Nigerians.

He said, “On the surface this looks like a solution to the problem that we have on ground but when you dig deep, you will realise that there are a lot of loop holes to this government's policy considering the standard of living of Nigerians and the level of unemployment.

“Those that are in support of this policy have argued that our current VAT rate is one of the lowest and even countries like Ghana charge higher rates.

“Most of these countries have designed their VAT systems to be able to serve the masses by charging VAT on big and medium businesses and using the proceeds to take care of poor masses while our VAT system on the other hand looks a bit faulty.

“This policy if not planned out well and will end up only making Nigerians pay more while government earns less.”

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