The Nigeria Economic Summit Group has drummed up support for a hike in Value Added Tax (VAT) as part of the ongoing tax reform process, saying it will boost government revenue.
Several bodies including labour unions and the 36 state governors have opposed the proposed increase in the VAT rate as outlined in the Federal Government’s Tax Reform Bills, saying it has the potential to worsen the economic hardship faced by Nigerians.
However, the NESG warned that government risks revenue losses if the VAT is not increased.
Chief Executive Officer of the group, Tayo Aduloju, who made the group’s position known, at a media interactive session, pointed out that while reforms in the VAT system are essential, maintaining the current VAT rate without an increase could lead to a significant loss of revenue for the government.
“Without those rate hikes, it means that the government might lose some revenue,” Aduloju stated.
The CEO noted that the ongoing fiscal and tax reform efforts aim to address the complexities of the tax system while ensuring the government still generates sufficient revenue to support its ambitious budget plans.
He further explained that the current tax reform process must strike a balance between simplifying the tax system and increasing the VAT rate to maintain revenue stability.
Aduloju added that simply reducing the number of taxes without adjusting the VAT rate could weaken the government’s revenue base.
He said, “If we win on the reform of the VAT system, and even if we postpone the rate hike by three years, it will still be a win. That will immediately show efficiency, and we can attract more companies to invest in Nigeria.”
Aduloju further highlighted the need for Nigeria to unlock investment opportunities to support revenue generation.
According to him, the country holds enough assets that could attract foreign direct investment if cleared of legal, regulatory, and policy bottlenecks.
He, therefore, called for better coordination between monetary and fiscal policies to tackle inflation, particularly those driven by high energy costs, noting that energy security remains a key factor influencing inflation, with inefficiencies in the downstream petroleum sector contributing to persistent price hikes.
