The Senate Committee on Finance is to invite the Minister of Finance, Zainab Ahmed, and the Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler to throw more light on the reasons for the proposed increase of Value Added Tax (VAT) from current 5 per cent to 7.2 per cent.
Reacting to the planned VAT increase after the Federal Executive Council meeting on Wednesday, Senator Solomon Adeola, Chairman, Senate Committee on Finance, said the proposed increase in VAT had generated mixed reactions from Nigerians, with some fearing it could worsen the living conditions of majority of citizens.
Said Adeola: “We are glad that the Minister of Finance indicated that the VAT Act will have to be amended for the increase to take effect. But we are concerned about the current economic situation of the country as it affects the generality of the people.”
Adeola said the interaction with the two key government finance managerrs will form part of the basis for the possible amendment of the VAT Act and to assuage any ill feelings borne by Nigerians against the proposed increase, if eventually amended.
However, the Peoples Democratic Party (PDP) and the Nigeria Labour Congress (NLC) have rejected the planned VAT increase.
The PDP, in a statement by its National Publicity Secretary, Kola Ologbondiyan, said any increment in VAT would subject Nigerians to more economic hardship.
The party, therefore, urged the National Assembly to reject the proposed VAT increase in the interest of Nigerians.
Ologbondiyan said, “President Buhari ought to be aware that an increase in VAT will worsen our decrepit economy and put more pressure on families and business as it will result in increase in costs of goods and services that have direct bearing on the welfare of the people,
“Our party charges the Buhari Presidency not to further punish Nigerians by imposing harsh tax regime to make up for its crass incompetence and lack of capacity to effectively harness and manage resources to create wealth for the benefit of the people .
“It is even more painful that the Buhari Presidency cannot give account of the huge resources at its disposal, including the taxes it has been collecting in the last four years, most of which are frittered to service the wasteful lifestyle of the cabal at the Presidency and APC chieftains.
“Instead of foisting more tax burden on Nigerians, the PDP charges President Buhari to account for and recover the over N14 trillion oil money established to have been stolen under his watch in the last four years.”
Reacting to the increase, NLC chief scribe, Emmanuel Ugboaja faulted the move saying it will erode the gains of the minimum wage that is yet to take off, six months after it was signed into law.
Ugboaja; “We see it as a move not well thought through with the welfare of Nigerian wage earners in mind. Its impact on Nigeria manufacturers and job creation and retention will be nightmarish. It is clearly insensitive to the plight of the ordinary Nigerian.
“What the government needs to do is to widen the tax net and get people to pay tax and not to over tax those that are in the net as of now,” said the NLC scribe.