Business News

Proposed VAT Increase: MAN Faults Government, Says It Will Boomerang

Published

7 years ago

May 27, 2019

By LOVETH AZODO, Lagos

The Manufacturers Association of Nigeria (MAN) has faulted the Federal Government’s contemplation of 50 percent increase of Value Added Tax (VAT), saying that it is coming at the wrong time which definitely will boomerang.

This is even as MAN acknowledged VAT as veritable revenue source to the Government for running the affairs of the country.

In a document made available to OPTIMUM TIMES, the Director General, MAN, Segun Ajayi-Kadir, stated that in terms of misery index rating, low per capita income, heavily lopsided income distribution pattern, the Nigerian economy will be in a more vulnerable state if VAT is increased.

The 50 percent increase on VAT recommendation was ventilated through pronouncement and commentary made on the floor of the Senate although, this commentary was later denied in a statement by Wahab Gbadamosi, Director Communication and Servicom as published in some National dallies.

However, the Association warns that if such commentary is anything to go by, it should be on record that such policy is not manufacturing friendly as the proposed VAT increase appears not to have taken into cognizance the prevailing times and the ongoing government efforts to re-invigorate the economy.

According to the Director General, “In terms of misery index rating, low per capita income, heavily lopsided income distribution pattern, the Nigerian economy will be in a more vulnerable state if VAT is increased.

“As plausible as the recommendation to increase VAT may look, implementing it at this time would boomerang because the timing is inappropriate, especially at a time when the minimum wage of N30,000 was just agreed upon.”

“A typical case of Government simply taking back what was given with the right hand through the National Minimum Wage with the left hand through 50% increase in VAT.”

The association advised that there should be harmonization in taxes/levies/fees payable by businesses in the country so as to attract more investment that would translate to higher productivity and more tax revenue for the Government in the medium and long term.