- NLC hails red chamber
- Govs may accept new pay
- FG considers increase in VAT by 50% to fund new salary package
The Senate yesterday rounded off debates on the 2019 Appropriation Bill, passing N30,000 as the new minimum wage for workers.
The passage attracted appreciation from the Nigerian Labour Congress, which gave kudos to the red chamber of the National Assembly.
But the federal government yesterday indicated that it might increase Value Added Tax (VAT) by 50 per cent to enable it pay the new pay package, which indications from the Nigerian Governors Forum (NGF) last night show that the state governors may accept to pay.
The proposal to jerk up VAT before the end of 2019 with a view to properly fund the national minimum wage was made public by both the Minister of Budget and National Planning, Senator Udo Udoma, and the Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, during an interactive session, with the Senate Committee on Finance headed by Senator John Enoh, on Medium Term Expenditure Framework (MTEF) for the 2019 budget.
Udoma and Fowler claimed that the federal government was considering an upward review of the five percent currently charged as VAT by 50 per cent to enable it to fund the new national minimum wage.
Udoma also emphasised that the Technical Advisory Committee on minimum wage, would submit its report to President Muhammadu Buhari this week.
He added that government would soon approach the Senate over the possibility of increasing VAT to fund the new minimum wage.
He said: “So we will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the minimum wage.
“Not just to fund the minimum wage but as you announce it, you now enter into negotiations with those above the minimum wage and we have to be prepared for that.
“So it is something we are going to work closely with the Finance Committee on how best this minimum wage will be addressed, both from the federal government and the states, to ensure that the whole government apparatus is not just paying salaries and nothing else.
“It is important that we are able to pay the minimum wage and still have enough resources to do infrastructure. The committee has virtually completed its work.”
Fowler said the proposed payable VAT by Nigerians based on the increment would actually be between 35 per cent and 50 per cent.
Fowler, who said the FIRS’ goal was to achieve an N8trillion revenue generation target this year, also said the 50 per cent increment will affect the Company Income Tax and the Petroleum Profit Tax.
According to him, “By the end of this year, we should be ready for an increase in the VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go for those trips. We should be ready for an increase on VAT.
“I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.”
Also yesterday, the Senate passed the new minimum wage bill which put the salary for the least paid Nigerian worker at N30,000.
It called for a review of the Revenue Sharing Formula to give the states more financial muscle with which to implement the new minimum wage.
The current revenue sharing formula gives federal government 52 per cent, while states and local government get 24 per cent and 20 per cent respectively and four per cent for ecological funds.
The upper legislative chamber also concluded debate on the general principles of the N8.83trillion 2019 budget proposals and referred it to its Committee on Appropriation headed by Senator Danjuma Goje.
The Senate at the plenary presided over by Senate President, Dr Bukola Saraki, directed the Appropriation Committee to submit report on the budget bill for final approval of Senate within two weeks.
All federal ministries and government agencies were directed by Senate to appear before the committee to defend the estimates for their agencies.
The approval of the new minimum wage bill came after the consideration of a report to that effect by the Senate Deputy Whip and Acting Chairman of the Senate Ad-hoc Committee on New Minimum Wage, Senator Francis Alimekhena.
The Senate while approving the report, however, rejected the proposal by Buhari that a fine of N5,000 be imposed on any employer who fails to keep records of workers but rather imposed a N75,000 fine on such defaulters.
It asked the ministry of finance to as a matter of urgency compute how much would be required to be added to the federal government’s 2019 budget as a result of the approval of the new minimum wage bill.
The report had recommended that N30,000 be approved as the new National Minimum Wage as contained in clause 3(1) of the bill while also recommending that the fine for not keeping records of employees should not exceed N75,000.
It also advised the federal government to put in place procedure for a review of the Revenue Sharing Formula to enable states to have financial muscle to implement the new minimum wage.
Contributing, Senate Minority Leader, Senator Biodun Olujimi, emphasised that Review of Revenue Sharing Formula is key to the implementation of the minimum wage, pointing out that without it many states won’t be able to pay.
On his part, Senator Barnabas Gemade, stated that state governments had enough money to pay, arguing that “with the kind of money deployed to buy votes, it means the states have so much money to pay workers.”
Senator James Manager was, however, of the opinion that it has become embarrassing that some states had not paid the N18,000 minimum wage approved several years back.
Also speaking, Senate Leader, Senator Ahmed Lawal, said the Buhari administration had fulfilled its promise of wage increase and asked workers to reciprocate because to whom much is given much is expected.
He also advised that government must not wait for strike to do its job. “I believe that 2019 will witness stability in the Civil Service,” he said.
The House of Representatives had on January 29 passed N30,000 as minimum wage for workers in both public and private sectors.
The National Minimum Wage Bill presented by President Muhammadu Buhari sought to prescribe the National Minimum wage for the country and provide a legal framework for ideal review of the national minimum wage in line with the period specified under the bill.
The 18-clause bill provides for the establishment of a Tripartite Committee on National Minimum Wage by Mr. President with equal representation from the federal, state governments, organised labour and organized private sector with the secretariat domiciled in the National Salaries, Incomes and Wages Commission.
The bill provided that the Tripartite Committee shall compose of a chairman, secretary, government representatives (the Secretary to the Government of the Federation, Head of Civil Service of the Federation, Minister of Labour and Employment, Minister of Finance, Minister of Budget, National Salaries, lncome and Wage Commission and state governors from each of the six geo-political zones to be nominated by governors from the zones.
Governors May Accept New Minimum Wage
Indications are that state governors may have dropped their opposition to the implementation of the N30,000 new minimum wage following the recommendations of the federal government’s technical committee on the new minimum wage.
The 36 state governors under the auspices of the Nigerian Governors Forum (NGF) had opposed the proposed new minimum wage figure of N30,000 as was recommended by the tripartite committee, saying that they lacked resources to implement it.
Instead the governors proposed N22,500 as what the states can afford.
However, reliable presidency source told THISDAY yesterday that the technical committee led by Bismarck Rewane has recommended two quick solutions to the financial crisis hitting the states.
Among the initiatives proposed by the committee were the increment in VAT and an adjustment in the official exchange rate of the Dollar to the Naira.
“The Rewane technical committee actually came up with solution to the problem that made the governors to say they will not be able to pay the N30,000. One of the initiatives proffered by the committee to cushion the impact of the new minimum wage on state governments is the increment in charges for Value Added Tax (VAT),”the source said, adding that there has to be an increment in VAT to 7% which will go to the states.
He said that the federal government has also acceded to the state governors’ demand to raise the official exchange rate of Dollar from N330 to about N346.
According to a source who is privy to some of the recommendations of the technical committee, said that provisions were being made to ensure that states get some surplus revenue earnings from the two initiatives which will make states to be able to pay the new minimum wage bill.
“I think that the states are likely to accept the minimum wage, especially as the official value of the Dollar is going to be adjusted in favour of the states.
In addition, the states are going to get resources from two to three other sources that is why the issue may not generate any further disagreement. These are highpoints of what the technical committee arrived at and I think the governors are comfortable with that,” it said.
Labour Hails Senate
Meanwhile, in a telephone interview with journalists, NLC Deputy President, Mr. Amaechi Asugwuni, urged Buhari to follow the part of honour and immediately sign into law the new pay rise document once he receives it.
NLC while applauding the Senate for the hike in the amount to be charged for defaulters, challenged state governments to brace up to accommodate the new salary increase once it is signed into law by the president.
The NLC, however, expressed reservation over Senate’s call for a review of the Revenue Sharing formula to give federal government 56 per cent, states 24per cent and local government 20 per cent, arguing that the minimum wage bill is an independent bill, which should not be subjected to adjustments in sharing formula by the Revenue Mobilisation and Fiscal Commission.
Also reacting to the Tuesday’s passage of the minimum wage bill by the Senate, the Head of Information Unit in NLC, Mr. Benson Ukpah, said the labour movement is happy with the Senate’s decision.
He said: “We would like to commend the Senate for having the presence of mind to act in concurrency with the House of Representatives. We will still need their support in the days ahead.”
When asked whether NLC expects further opposition from the state governors on the N30,000 new minimum wage figure, he said members of the organised labour were not expecting anything that will drag the process backwards.
“We do not expect to go back and forth, the process that led to the arrival at the N30,000 new minimum wage remains unimpeachable and cannot be controverted by anybody. We do not envisage any party acting within the precincts of the law to oppose what the National Assembly has approved,” he said.