Executive vice Chairman of Famfa oil has described the planned increased of the Value Added Tax (VAT) from its current 5 per cent to 7.5 per cent by the federal government as a threat to entrepreneurs in the country.
The Federal Executive Council (FEC) had approved the increment of the VAT to 7.5 per cent from 5 per cent. The Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed this to state house correspondents at the end of the cabinet meeting on Wednesday, September 11, 2019.
Alakija, who is the richest woman in Africa disclosed this in an interview, noting that if the proposed VAT increment should be fully implemented, it will be difficult for entrepreneurs that operate within the shores of the country to make money.
“Increasing VAT will make it more difficult for entrepreneurs to be able to make as much money as they would have liked to. But it is also what the government need for nation-building, because it is tax that the government earns as income. Without tax, no government can really stand on its legs. So long that it is being ploughed back into the areas where they are needed, and they are not growing wings.”
If approved by the federal lawmakers, the new VAT rate will take effect in 2020. In Nigeria, VAT replaced the sales tax in 1994 and was pegged at 5 per cent by the military government of Sani Abacha.
In 2007, former President Olusegun Obasanjo increased VAT to 10 per cent on the eve of his departure from office but it was reversed by his successor, Umaru Musa Yar’Adua, following opposition from the Labour Unions.
Meanwhile, it is important to note that despite wide criticisms that have greeted both the VAT increment, the Federal Government considers the move as the most potent channels to meet the new minimum wage implementation.