Any rise in Value Added Tax (VAT) would deepen poverty among Nigerians, a former Minister of State for Finance, Dr Yerima Ngama, has said.
Speaking on Thursday in Abuja, the former minister warned that it is not justifiable to increase VAT at a time Nigerians are bearing the brunt of daunting economic challenges occasioned by President Bola Tinubu’s fiscal reforms.
Dr Ngama revealed this at the Public Hearing on Tax Reform Bills organized by the House of Representatives Committee on Finance at the National Assembly Complex Abuja.
Speaking on behalf of the Arewa Consultative Forum (ACF), Dr Ngama, rejected the proposed VAT increase, inheritance law, scrap of TETFund, NASENI and NITDA, among others.
He said increasing VAT would amount “to punishing those paying VAT. The federal government should expand the tax net, not increase the tax.”
He said even if taxes are increased, the federal government agencies have no capacity to collect it. “We should be talking about improving our capacity to collect the collectible tax, but not increase it. Of what importance is increasing the tax when you cannot collect up to 30 percent of it?”, the former minister said.
He recommends retaining the current 7.5 percent VAT rate, citing the economic challenges facing citizens and businesses.
He said the association recognizes that the government needs to increase revenue, “but we also believe that the current VAT rate already places a significant burden on citizens and businesses.
“Increasing the rate further could have unintended consequences, such as reducing consumer spending and harming economic growth,” Ngama said.
On the issue of VAT distribution, Dr Ngama said the formula can be reached through political consensus, but not necessarily through a law. “It is not everything that must be put in a law. The issue of VAT distribution can be determined politically — through a consensus between the federal, states and local governments,” he said.
He also recommends significantly reducing the powers attributed to the Chief Executive Officer and Chairman of the Board of Directors/Governance of the Joint Revenue Board.
Dr Ngama said the proposed legislation centralizes excessive supervisory and accountability powers in a single individual.
“The National Revenue Service chairman is too powerful. We know is a hardworking person, but the workload is too much for him. He appoints the coordinating directors, he chairs the board of NRS, that is too much for him.”
He recommends that the president appoint the coordinating directors as executive directors subject to the approval of the Senate.
He recommends amending Section 69 of the proposed Nigeria Tax Bill to retain TETFUND and NITDA because they play critical roles in promoting education and technological development in Nigeria, and their retention is essential for the nation’s continued progress.
On inheritance law, he said the National Assembly should expunge the section completely and “allow states and local governments to determine that.”
He commended President Tinubu for creating livestock ministry, saying “the livestock minister should be given a target of establishing 40-world class ranches across the country before 2027.”
In its presentation, Centre for Promotion of Shariah, represented by Professor Kabiru Dandago, an accounting and taxation expert from Bayero University Kano, said the ‘supremacy clause” in Section 202 of the Nigeria Tax Bill (NTB), which grants the bill supremacy over all other laws related to tax administration, assessment, collection, accounting and enforcement.
Professor Dandago said, “To address this issue, the Centre strongly recommends that Section 202 be
expunged or amended to ensure the NTB’s alignment with Nigeria’s constitutional framework.”
CPS also recommends that Section 190 of the NTB be amended to retain all VAT-exempted items listed in the Finance Act (2020).
On the issue of fiscalisation, the centre suggests that all issues related to fiscalisation, such as Section 23(1), Section 69(1-2) and Section 99, be deleted from the NTAB until the country is ready to implement them.
The National Assembly is considering four proposed legislations this: The Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, the Joint Revenue Board Bill, and the Nigeria Tax Bill.
The two chambers of the National Assembly have passed for a second reading the four proposed legislations.
