Tax news – Page 26 – Sunmola David & CO

Better to Boost Revenue By Raising VAT than Borrowing

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele yesterday justified the proposed move by the federal government to increase the value added tax (VAT), which is currently at 5 per cent to 7.5 per cent. He said the government was apparently left with no other option than to raise taxes to meet its obligations- amidst criticisms over the country’s rising debt profile as well as the burden to service such debts. The CBN governor also assured Nigerians that the planned nationwide implementation of the cash policy scheduled for March 2020 would be of immense benefits to the people and the country in general. Addressing journalists at the end of the two-day meeting of the Monetary Policy Committee (MPC), Emefiele said government’s current drive to increase VAT had the potential to improve fiscal revenue to support expenditure and reduce the budget deficit as well as government borrowing, when implemented. Notwithstanding public outcry over the proposed increase, the MPC noted that the rate of VAT increase “was too little to close the gap in government finances.” Accordingly, the MPC urged the government to, as a matter of urgency, adopt what it termed a ‘Big Bang’ approach towards building fiscal buffers by purposefully freeing-up redundant public assets through an efficient, effective and transparent privatisation process. This, according to the committee, would raise significant revenue for government and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth. The MPC further noted the unstable oil prices, its implications on accretion to external reserves and its persistent call on the government to build fiscal buffers. Consequently, the Committee urged the National Assembly to exercise restraint from increasing the oil price budget benchmark to avoid budgetary overruns at the implementation stage of the budget. It noted that projections from the oil futures market indicate that oil prices will remain tight around the budget oil price benchmark in the medium term. The apex bank, however, resolved to retain the Monetary Policy Rate (MPR) otherwise known as interest rate at 13.5 per cent. The MPR is the rate at which the CBN lends to the real sector and often determines the cost of borrowing in the economy. It further retained the asymmetric corridor at +200/-500 basis points around the MPR while the Cash Reserve Requirements (CRR) and Liquidity Ratio remained at 22.5 per cent and 30 per cent respectively. Emefiele said the Committee decided by a unanimous vote to hold the MPR and all other policy parameters constant. According to him, “In its considerations regarding the policy options to adopt, the MPC as usual, felt compelled to review the options of whether to tighten, hold or loosen. “The Committee noted the positive moderation in inflation, though slowly from 11.08 per cent in July to 11.02 per cent in August 2019. Given that this was still above the target range of 6-9 per cent, and considering the pressure on reserve accretion caused by the relatively weak crude oil price, the MPC felt the imperative to tighten.” He added: “On the contrary, the MPC was of the view that doing so in the midst of a fragile growth outlook, would increase the cost of credit, and further contract investment and constrain output growth. “On loosening, the Committee felt that this would result in increased system liquidity and hence, heighten inflationary tendencies in the economy. In particular, the MPC was of the view that loosening would drive growth in consumer credit but without a corresponding adjustment in real sector output. “The Committee was also convinced that increased liquidity and interest rate moderation would result in exchange rate pressures as money supply rises. “As regards the option to hold, the MPC opined that the option requires a clear understanding of the quantum and timing of liquidity injections into the economy, before deciding on possible adjustments to the stance of monetary policy. “The Committee was also of the opinion that retaining the current position of policy offers pathways to appraising the effects of the suit of heterodox monetary policy to encourage credit delivery to the real sector, especially in the light of the subsisting implementation of the Loan-to-Deposit Ratio policy.” On the proposed VAT hike, the CBN governor said: “My response here is that the government has a responsibility to fend for everybody. In fending for everybody means it has to spend money to provide infrastructure, roads, airport and different things that will improve the lives of our people. “But there are two ways through which the government can fund this expenditure: It is either it raises revenue or it goes for debt. You all know that the government has been criticised that the debt stock is too high. You all know that government has been criticised that its debt service ratios are too high.” He further added: “When you say the debt service ratio is too high, it means that your interest rate is too high to revenue and what that also means is that your revenue is small because if your revenue is large, then your debt service ratio should be lower. “Government unfortunately will not have any options if we say government should not borrow- then government must raise revenue. If government must raise revenue and we think that this should be one way through which the government can raise revenue to meet its obligations, I think it calls to a rationale that what we are saying is that it is the right decision to say that government has to increase VAT from 5 per cent to 7.5 per cent.” He further clarified: “Yes, we agree that this may be painful but it is important that we understand that government also has an obligation that it must meet and so it must raise revenue. “And what is this VAT rate? 7.5 per cent: compare the VAT rate in Nigeria to VAT rate in any part of the world. Nigeria’s VAT rate even at 7.5 per cent stands at one-off if not

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Illegal Tax deductions: FIRS to refund $2m, others to General Electric

Tax news / Tobi Aminu

The Federal Government has urged General Electric to refund N360 million and two million dollars excess withholding tax (WHT) deducted from Arco Petrochemicals Engineering Company Limited, through its business dealings with General Electric (GE) International Operations Nigeria. This was part of outcome of the negotiations between FIRS officials, General Electric, ARCO and the Trade Union Services Department of the Federal Ministry of Labour and Employment in Abuja on Tuesday. The News Agency of Nigeria (NAN) recalls that GE, a multinational company operating in Nigeria, had engaged Arco, an indigenous Nigerian oil servicing company, for the supply of local personnel. But Arco in one of its letters dated June 5, 2018, claimed that GE deducted 10 per cent as withholding tax for the contract between 2006 and 2015, against the five per cent stipulated by Nigerian law. The company said the applicable tax rate should be five per cent in line with the FIRS Circular No. 2006/02, dated February 2006. Following the controversial tax remittance disputes between General Electric (GE) and Arco Group Plc, 60 per cent of the worker’s entitlement have not been paid since 2009. An official of the Ministry of Labour and Employment, who pleaded anonymity said, although the Federal Government was not a debt collector, it intervened because ARCO accepted responsibility that they have financial obligation to settle people’s salaries and Union dues. “The ministry is not a debt collection agency, it came into the matter because ARCO accepted its financial obligation for the settlement of salaries and union dues, the company said the only way it could complete the payment is if GE made a refund to it. “We gave them three weeks to begin process of refund for those monies that they have an understanding that they were actually over-payment to FIRS. If there is no contention on that, within one week, GE should initiate the process of refund. “FIRS said they have to go through some processes before they can get cash back to pay. For those that there are contentions, let them try to get their books together and reach an agreement within two weeks. “The unions involved said they have the list of what is due to their members that has not been paid by ARCO. We expect that those reconciliations will be completed and payment will be made.” Mr Amadike Ikechukwu, Branch Chairman, ARCO Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said ARCO paid field workers 100 per cent of their entitlement but paid only 40 per cent to other categories of staff when their employments were terminated. He said ARCO claimed that it could not complete the payment because the American company, General Electric, deducted 10 per cent withholding tax from workers earnings and paid the sum, which runs into millions of dollars, to FIRS. “As union leaders, we agree with the commitment made by FIRS and GE. We are optimistic that the remaining 60 per cent will be paid to the workers,” he said. (NAN). Source: The Sun

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FG denies Guinness, Dangote, 13 others tax relief

Tax news / Tobi Aminu

The Nigerian Investment Promotion Commission has rejected the application of 15 companies seeking pioneer status under the Industrial Development Income Tax Act. The pioneer status is an incentive from the Federal Government which exempts companies from income tax. It is also known as tax holiday and generally regarded as industrial investment device. This means the companies with pioneer status do not have to pay tax for a certain period of time, allowing the companies to get established. This tax exemption can be full or partial. The products or companies suitable for pioneer status are industries or products that do not already exist in the country. An analysis of the second quarter Pioneer Status Incentive report obtained from the NIPC showed that while 15 companies had their applications rejected, approval in principle was given to 10 firms. The report stated that two firms had their applications extended while 181 other applications were still pending. It put the number of firms currently benefiting from the tax incentive scheme at 32 while 104 companies had abandoned their applications with the NIPC. The 15 companies whose applications were rejected are Umugini Asset Company, Aristocrats Industries Ltd, Guinness Nigeria Limited, StrongPack Limited, Grit System Ltd, Scott Industries Limited and Flexipack Ltd. Others are Ultimus Constructions Ltd, NG Clearing Ltd, Dangote Ibese Lines 3 and 4, Dangote Cement Obajana Line 4, Promasidor Nigeria Ltd, Daraju Industries Ltd, West African Packaging Ltd and Flour Mills of Nigeria Plc. Providing reasons for the rejection, the commission in the report stated that the requests from two out of the 15 firms were time barred, while the activities of 10 other firms were not covered under the pioneer status-incentive list. For the other three companies, it explained that their applications were rejected because their expansion projects were not eligible under the Industrial Development Income Tax Relief Act. The NIPC in the report also stated that 10 companies got approval in principle for tax incentives. The companies are Amarava Agro Processors Ltd, Solis Agro Ltd, Indigo Feeds Nigeria Ltd, Polar Petrochemicals Ltd, Royal Pacific Group Ltd, Wacot Rice Ltd, Olam Hatcheries Ltd, Crown Flour Mills Ltd, Gowus Nigeria Ltd and Harvestfield Industries Ltd. Source: Punch

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Tax vacant houses, UN Rapporteur urges FG

Tax news / Tobi Aminu

Ms Leilana Fartha, UN Special Rapporteur on the Rights to Adequate Housing, on Monday urged the Federal Government to impose vacant home taxes with a view to addressing housing challenges in the country. Fartha at a news conference in Abuja expressed concern over the human rights crisis presented by poor living conditions in Nigeria’s informal settlements. According to her, the informal settlements house about 69 per cent of the urban population. She said, “Most residents in Nigeria’s ballooning informal settlements live without access to even the most basic services, like running water. “And they lack any security of tenure, forcing them to live in constant fear of being evicted. “My 10 days fact-findings visit to Nigeria has presented an economic inequality in the country, which has reached an extreme level and is playing itself out clearly in the housing sector. “There is an estimated housing shortage of 22 million units. “At the same time, newly built luxury dwellings are springing up throughout cities and made possible often through the forced eviction of poor communities. “These units do not fulfil any housing need, with many remaining vacant as vehicles for money laundering or investment,’’ she said. While urging the Federal Government to take urgent measures to address homelessness and poverty, Fartha advocated for a declaration of a nation-wide moratorium on forced evictions. “Government must address the grossly inadequate housing conditions with the urgency and rigour befitting a human rights crisis of this scale. “Apart from establishing a national commission to investigate gross human rights violations in the context of forced evictions, government should provide basic services to all informal settlements. “And must increase the number of shelters for persons in situations of vulnerability,’’ Fartha said. She further expressed worry that the Bill for an Act to provide rent control failed in the National Assembly. According to her, when the bill for rent control first hit the National Assembly, it wasn’t ripe “It is unfortunate that the bill died in NASS. “The idea of controlling rent caps is hotly debated in many countries. “New York just tried to have rent control laws passed; Barcelona is close to getting rent-free as rent is actually frozen for some period of five to seven years. “So, in many jurisdictions, they have started to impose a vacant home tax. “I support that kind of move from human rights point of view only where that money from the tax is directly put into the creation of affordable housing. “In the case of Nigeria it could be used as fund to upgrade informal settlements.” Source: Punch

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No Going Back on Aggressive Tax Drive, FG Insists

Tax news / Tobi Aminu

The Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, has said there is no going back on the federal government’s determination to increase public revenue through intensified tax collection. This is coming as the Tax Leader, PwC, Mr. Taiwo Oyedele, has raised the alarm that Nigeria’s tax system contains 354 different taxes, stressing that these multiple taxations do not allow businesses to thrive. Speaking during the Lagos Chamber of Commerce (LCCI) 2019 Presidential Policy Dialogue on the Economy, held in Lagos at the weekend, Adebayo, said those expecting the government to reduce taxes and at the same time increase revenue to meet its responsibilities to the country should come and show the government how to perform the magic. He said: “You want us not to increase tax but you want us to increase revenue. May be, you will come and advise us on how to do it because I think that will require some serious magic. But one thing I can assure you is that I don’t think government has any plan to reduce tax at this point in time. “What we are doing is that government has embarked on aggressive tax collection and is doing everything possible to increase the tax bracket so that all the money the government has not been able to get in the past will be collected to improve our revenue generation.” The minister said he was at the Presidential Policy Dialogue to hear concerns of the private sector operators and transmit them to the government for favourable policy formulation. “I believe that there are certain things that should be done by the private sector. That is why we are here. It is for you to tell government how to make it easie for you to achieve these things. “If you tell us, and advise us on how government can assist to make it easier for you to promote your businesses, then we will do our best to make things easier for you. I am here to listen to your problems,” Adebayo said. The minister’s statement came after the President of LCCI, Mr. Babatunde Paul Ruwase, spoke the minds of the organised private sector in the opening in which he decried the crippling effects of taxation on businesses. Ruwase said: “Multiple taxations are still issues with many companies. There are also issues of multiple levies and fees by government agencies at the federal, state and local government levels. While we were grappling with this, we heard the announcement of an increase in VAT from five percent to 7.5 percent. “This will no doubt put additional pressure on businesses because consumer purchasing power is already weak.” He noted that these are not the best of time for the Nigerian economy, saying the short-term outlook of the key economic indicators was not looking bright. He also called for policies that would transform the economy and end the countries reliance on oil, which was the major trigger of the economic downturn in Nigeria because of the volatility in oil price. “This time calls for reforms in the economy. We need the right mix of policies that will achieve the desired outcomes. I am aware that some policy choices have been made by the present administration to promote economic diversification, stabilise the foreign exchange market and promote small businesses. Evidently, there are still some works to be done. “There is need for regular engagements and communication on policy issues to ensure quality feedback that will enrich the policy making process. “This should cover macroeconomic policies, sectorial policies. These will include foreign exchange policy, trade policy, tax policy, energy policy, transport policy, industrial policy, agricultural policy, ICT policy, among others. Some of these are cross cutting, while others are sector specific. “The message is that regular engagement with relevant stakeholders in the various sectors will bring a lot of value. The regulatory environment needs to align with this vision as well. This policy dialogue is our contribution to this process,” Ruwase said. In another development, the Tax Leader, PwC, Mr. Taiwo Oyedele, has advised that government should create policies that would enable businesses to grow, rather than over-burdening businesses with taxes in an era when governments elsewhere were reducing taxes to encourage businesses. Oyedele, who spoke at the 2019 Annual Conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos at the weekend, said Nigeria’s tax system was a serious disincentive to businesses because the government did not seem to appreciate that firms needed to be prosperous to be able to pay tax. The theme of the conference was “Unlocking Opportunities in Nigeria’s Non-Oil Sector.” According to him, all the tiers could collect as much revenue as they are doing currently from just five taxes against the 354 different taxes that currently exist in Nigeria presently. “Nigeria has a tax system that does not allow businesses to thrive whether they are small or big. There is a provision in the Nigerian tax law that taxes a holding company twice. “The company tax rate in Nigeria is one of the highest in the world. We are the top 10 in the world for highest income tax rate. About 40 percent company tax. “It does not make sense. Government has to remove tax disincentives. The business community should ask government to remove disincentives that do not allow them to do business rather than begging for incentives,” Oyedele said. He also stressed that the government was over burdening the informal sector with taxes. “A business earning as low as N5,000 is expected to file for VAT while in Ghana a business making less than N1 million equivalent is not expected to file for VAT. “In Kenya, it is N17 million equivalents. South Africa is N33 million. All these three economies are smaller than Nigeria. Why is Nigeria different?” he asked He added: “I look at personal income tax, in Ghana if you do not make about N500,000 you will not pay personal income tax at all. It is more than

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FIRS Releases The Income Tax (Common Reporting Standard) Regulations 2019

Tax news / Tobi Aminu

The Federal Inland Revenue Service (FIRS) recently released the Income Tax (Common Reporting Standard) Regulations (The Regulations). The Regulations seek to give effect to various international conventions, treaties and guidelines between Nigeria and other contracting States with respect to mutual administrative assistance, automatic exchange of financial account information and compliance with common reporting standards and the relevant provisions of the FIRS (Establishment) Act and Companies Income Tax Act relating to FIRS’ power to call for returns and access taxpayer’s records. The Regulations apply primarily to all Nigerian Financial Institutions, excluding government entities, international organisations, central banks and any other entity that presents a low risk of being used to evade tax and is defined in the domestic law as a Non-reporting Financial Institution. Pursuant to the Regulations, the affected Nigerian Financial Institutions (referred to as Reporting Financial Institutions – RFIs) are required to: Establish, maintain and document due diligence framework in line with Sections II-VII of the Common Reporting Standards (CRS) to enable them classify, determine the extent of background information requirements and reporting obligations of “Reportable Accounts” maintained by the institutions. Reportable Account is an account held by an individual or entity (including partnerships) that is tax resident in any country other than Nigeria or United States of America. Prepare annual information return relating to Reportable Accounts, in a specific format with effect from 2019 calendar year. Submit the returns electronically using a technology provided or approved by FIRS no later than 31 May of the year following the calendar year which the returns relate. In essence, the first return is due to be submitted on or before 31 May 2020. RFIs are mandated to submit “Nil” returns, where no “Reportable Accounts” have been identified. Store records relating to the returns, for at least 6 calendar years from the last year in which the records were relevant. The Regulations also contain anti-avoidance mechanisms to ensure that RFIs do not avoid any obligation imposed under the Regulations by engaging in arrangements and/or compromises with a purpose of avoiding such obligation. Furthermore, there are stiff penalties for non-compliance with obligations under the Regulations as described below: It is pertinent to note that FIRS has the discretion to exempt RFIs from the imposition of any of the above penalties where there is a reasonable excuse for the non–compliance or default. Exemption due to reasonable excuse shall remain valid even after the excuse has ceased provided that the failure was remedied within a “reasonable time”. However, failure as a result of fund insufficiency or reliance on another party, will not be considered a reasonable excuse. With the release of the Regulations, Nigeria joins other countries in striving towards a more transparent and global approach to taxation. Nonetheless, the impending implementation of the Regulations raises concerns such as: Possible breach of confidentiality and safeguard of data at operational level. Subjectivity in interpreting what constitutes “reasonable excuse” for the purpose of granting for exemption from the administrative penalties. Overall, all Nigerian Financial Institutions are urged to review the Regulations in detail, to ascertain applicability and compliance obligations. Source: Mondaq

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NESG advocates reduction in taxes, competitive economy

Tax news / Tobi Aminu

The Nigerian Economic Summit Group has emphasised the need for the government to reduce the number of taxes levied on businesses in the country. The NESG said out of about 3,000 forms of taxes operational across the country from the federal to the local government level, only four of them generated 96 per cent of government revenue. Ogun State, preparatory to the group’s summit slated for October 7 and 8. Jaiyeola also urged the Federal Government to ensure that modes of finance were prepared together with the budget. He said, “You can spend all the time analysing budget. The question is, to what extent do we take it seriously? Not only that we should have a budget, but also we should also have a finance bill. You don’t talk just about the budget; you also talk about how to get the money to fund the budget. “Part of the work we have done recently is to tell the government that there are so many taxes. There are over 3,000 taxes across Nigeria from federal to state and local government levels. Only four provide 96 per cent of government revenue. Part of the things we are telling the government is to streamline the taxes.” Jaiyeola stated that the theme of the summit, “2050: Shifting Gears,” would examine how the government could prepare for Nigeria’s population projected to be the third biggest in the world by 2050. The NESG CEO said the office of the Minster of Finance, Budget and National Planning had agreed to work with the group, noting that the summit would identify the key things to drive the economy. He explained that after the event, a “green book” which is a summation of all the agreements reached at the summit would be presented to the Federal Executive Council for consideration. “We also distil the conclusion into policy commissions where we have about 45 thematic areas, ranging from health, education, agriculture, infrastructure and even sport. “The policy commission is a collection of public and private sectors. Their role is to constantly engage the government to ensure implementation. “By 2050, it is established that if we go on present trajectory, Nigeria will be the third most populous nation in the world. The question is: how do we embrace that? “Our vision is that Nigeria must be an economy that is competitive, market-driven, innovative and inclusive. Part of our major problems is lack of inclusion.” Jaiyeola commended President Muhammadu Buhari for its new Economic Advisory Council and also urged the government to listen to its recommendations. Source: Punch

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NASS must pass bill on VAT increase before implementation, Falana tells FG

Tax news / Tobi Aminu

Human Rights Lawyer, Femi Falana, has called on the Federal Government to propose a Money Bill to the National Assembly before the implementation of the increase in Value Added Tax. Falana told the News Agency of Nigeria in Abuja that the National Assembly erred by inviting the Minister of Finance and the Executive Chairman of Federal Inland Revenue Service to clarify issues of VAT increment. According to him, provisions of the constitution states that the President ought to have presented a Money Bill to be passed by the NASS before the increment. “It’s illegal. Under a democratic dispensation, you cannot impose tax or increase tax without a law made by the National Assembly or the State Assembly as the case may be. “In this case, it has to be realised that we are not under a military dictatorship. “By virtue of section 59 of the Nigerian Constitution, any increase, levy or tax will have to be presented to the National Assembly by way of Money Bill by the President, it has to be passed into law. “The Senate erred in law by inviting them to come and clarify. The National Assembly has invited the Minister of Finance and the Federal Inland Revenue Services to come and clarify. “No, the National Assembly must insist on its powers under Section 59 to pass a law to increase VAT or any tax, there can be no taxation without legislation. “The Federal Executive Council has no power under the Constitution to increase VAT or any tax in the country,” Falana said. NAN recalls that the Federal Executive Council had last Wednesday approved the increment of VAT from 5 per cent to 7.5 per cent. The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had explained that the increase would only begin after the VAT Act was amended by the National Assembly and after consultations with the state and local government areas as well as the Nigerian populace. Source: Punch

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The FIRS Has Published Regulations On Common Reporting Standard

Tax news / Tobi Aminu

The Federal Inland Revenue Service (FIRS) has issued the Income Tax (Common Reporting Standard) Regulations, 2019 (CRS Regulations). This follows Nigeria’s signing of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, signed by Nigeria on 17 August 2017. Fundamentally, the CRS Regulations and the various agreements signed by the FIRS will allow it to receive specified information on the bank accounts held by Nigerian tax residents in up to 105 countries. In exchange, the FIRS will be obligated to provide similar information to these other countries. The CRS Regulations have an effective date of 1 July 2019 and require qualifying Nigerian Financial Institutions to submit an electronic information return (i.e. a return that reports specified financial account information of certain persons) to the FIRS on an annual basis. The information is to be provided in respect of “reportable accounts”, which subject to certain exemptions, are the Nigerian accounts of persons who are resident for tax purposes in a foreign country with which Nigeria has signed the relevant exchange of information agreement. Other relevant provisions include: First reporting year: starting from 2019 calendar year Filing deadline for information return: 31 May of the year following the calendar year to which the returns relate Penalties for non-compliance: Failure to comply with duty or obligation imposed by the CRS Regulations: ₦10 million in the first instance in addition to ₦1 million/month Failure by Financial Institution to file information return: ₦10 million in the first instance in addition to ₦1 million/month Furnishing false or incorrect information: ₦5 million Failure by Financial Institution or any person to comply with the FIRS’ requirement in the exercise of its powers: ₦1 million in the first instance in addition to ₦100,000/month Failure by Financial Institution to keep records in accordance with the Regulations: ₦1 million in the first instance in addition to ₦100,000/month Source: Mondaq

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Stop crying wolf on VAT, BMO attacks PDP

Tax news / Tobi Aminu

The Buhari Media Organisation (BMO) has cautioned the Peoples Democratic Party (PDP) to stop crying wolf or seeing ghosts where none exist, especially over federal government’s plan to increase the Value Added Tax (VAT) from 5 per cent to 7.5 per cent. Reacting to the PDP’s rejection of VAT, the group warned the opposition party to stare clear of matters that it does not have a full understanding of. It also urged the party not to undermine a patriotic and genuine effort of President Muhammadu Buhari’s administration to raise the needed resources to address some of the major infrastructural needs of Nigerians. The PDP had earlier called on the federal government to reverse its decision to increase VAT, warning that such planned increase would put more pressure on families and businesses and result in an increase in costs of goods and services. In a statement signed by its Chairman, Niyi Akinsiju and Secretary, Cassidy Madueke, BMO said if the PDP is genuinely worried that Nigerians could not bear the burden of the 2.2 per cent marginal increase in VAT “under the prevailing economic situation in the country,” the party should have first demonstrated its patriotism and genuine concern for Nigerians by directing its Governors, who were part and parcel of the decision to effect increase in the country’s tax regime, to reject the idea rather than calling on the Federal Government to reverse its decision on the new policy. “In any case, States and Local Governments stand to benefit more from the increase in VAT; the states get 50 per cent of the VAT collection, Local Governments get 35 per cent, leaving the federal government with a paltry 15 per cent. “So, it stands to reason that this particular increase in VAT is another bail-out mechanism designed by President Muhammadu Buhari to assuage the woes of those perennially broke tiers of government.” The group added that even with the new marginal increase, Nigeria has one of the lowest VAT rates in the world, “and considering the huge infrastructural deficit the country is facing today, the current government has to think outside the box and look for how best to raise resources to meet some of the major needs of its people and also ensure that the impact does not put much burden on the citizenry. “And this is what the government is trying to do with this marginal increase in VAT.” BMO reminded PDP and Nigerians that VAT is not paid on domestic foodstuffs and local transportation. Other items excluded from VAT are drugs, medical equipment, educational materials and other items that generally affect the purse of the man on the street. “Essentially, VAT is payable on luxury goods, cigarette, wine, air travel and other luxury items that are the exclusive preserve of the rich and the opulent. “Also in the light of global trend, it has become imperative for our government to harmonise Nigeria’s VAT rate with what obtains within the ECOWAS region. Even with the marginal increase of 2.2%, Nigeria is still far below all the African countries in the VAT rate regime. “So what is PDP’s beef about; can it be that those who have grown rich from robbing our commonwealth, most of whom are in the PDP, are now going to pay more for their flamboyant lifestyle? “It is highly unfortunate that a party that presided over the highest figure of oil receipts in the nation’s history now constitutes itself as a stumbling block to frustrate all genuine efforts of the current administration, which has shown much interest and has demonstrated strong capacity to address the poor infrastructure problems PDP fostered on the nation.” BMO then called on all Nigerians to ignore the nay-sayers, and rally round President Muhammadu Buhari who has committed himself to good governance, and life more abundant to the Nigerian masses. Source: The Sun

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