Minister of Budget and National Planning, Senator Udo Udoma, and the Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, on Tuesday said the Federal Government was considering an upward review of the Value Added Tax by 50 per cent.
Udoma and Fowler who stated this on Tuesday when they appeared before the Senate Committee on Finance, said the increment was to, among others, enable the Federal Government to fund the new national minimum wage.
The government is currently charging five per cent VAT on all products in the country.
Fowler said the proposed payable VAT by Nigerians based on the increment would actually be between 35 per cent (6.75%) and 50 per cent (7.25%)
He said that the goal of FIRS’ was to achieve an N8trn revenue generation target this year adding that the 50 per cent increment in VAT will affect the Company Income Tax and the Petroleum Profit Tax.
“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.,” he said.
Udo Udoma also submitted to the Committee headed by Senator John Owan-Enoh that the Technical Advisory Committee on the minimum wage, will submit its report to President Muhammadu Buhari this week.
He said: “It will be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the Minimum Wage.
“Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states; it is a tough time to review wages. But the N18, 000 is really too low and it is difficult for people to live on N18,000.
“The President supported a revision but it is important that as we are revising (the Minimum Wage), we make sure that it can be funded that is why we set up the Bismark Rewane Technical Committee.
“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 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.”