The Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, has advocated for a 50 per cent increase in Value Added Tax, VAT, from the present 5 per cent.
VAT revenue is collected by the Federal Inland Revenue Services, FIRS, and shared among the three tiers of government and it is borne by the final consumer of goods and services (except medicines, basic foods, exports, books/educational materials, baby products, farm machineries and few other items. Thus, VAT also adds to the marginal costs of all goods and services that are taxable.
Chairman of RMAFC, Mr Shettima Gana who spoke on Thursday, July 14, in Kano at a two-day National Revenue Retreat on strategies to expand the revenue base of the government and the new sources for revenue generation, said a rise in VAT is one way government can get more revenue.
The proposition if executed will see the VAT on all consumer goods among others, rise by 2.5 per cent. Moreover, the Commission wants it pegged at 10 per cent in the long run.
Although experts have argued that, increasing VAT will make goods and services too expensive which is a disincentive to commercial activities and could trigger inflation.
Gana however, argued that Nigeria’s current VAT rate is one of the lowest in the world. He said South Africa’s VAT is 14 per cent, Togo, Senegal, Guinea and Chad are 18 per cent while that of Niger Republic is 19 per cent.
