“So, for Lagos State, automatically, consumption tax is 12.2 per cent.”
Businesses in Lagos will pay 12.2 per cent on the sale of goods and services once the 7.2 per cent Value Added Tax increase comes into force.
An analyst with Afrinvest, Adedayo Bakare, pointed this to SaharaReporters on Wednesday during a chat.
The Lagos State Government had since collected tax from restaurants and other retailers under a sales tax law despite a Supreme Court ruling against such in September 2018.
Bakare while speaking with SaharaReporters, said, “In Lagos, consumption tax is already 10 per cent because Lagos State charges five per cent VAT and there is also another consumption tax of five per cent.
“So, for Lagos State, automatically, consumption tax is 12.2 per cent.”
Citing the data on VAT collection given by Nigeria’s former Finance Minister, Kemi Adeosun, in 2018, Bakare said only about four states were generating most of the VAT, adding that the tax burden on just a few is disproportionate.
“Meanwhile, when they generate all these money, they will share it between 36 states when most of the money is generated in just four states.”
While admitting that the hike in VAT was not wrong, Bakare said there was a more urgent need to keep widening the tax net.
He added, “It is important that they widen the tax net to bring more informal businesses to the formal sector.”