Nigerian government to increase VAT to pay N30,000 minimum wage

Senator Udo Udoma

Minister of Budget and National Planning, Senator Udo Udoma. PHOTO CREDIT: fmic

Nigeria’s upper legislative chamber, the Senate, on Tuesday approved N30,000 as new national minimum wage for both the federal and state governments. This is even as the Federal Government is considering increasing the Value Added Tax (VAT) rate presently at 5 percent to fund the new minimum wage.

VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

The Minister of Budget and National Planning, Senator Udo Udoma, disclosed this when he appeared before the Senate Committee on Finance on Tuesday.

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He said while President Muhammadu Buhari supports a review of the minimum wage from N18,000 to N30,000; “it is important that as we are revising it, we should be able to fund it”. 

“It is in the light of this that we would be coming to you (Senate) because there may be the need to make some changes, especially the VAT, in order to fund the minimum wage once it is announced,” he told members of the Senate Finance Committee. 

He also assured that capital projects and other sectors of the economy will be adequately funded by government. 

The Senate approval of the new minimum wage followed the adoption of the ad hoc committee report set up by the upper legislative chamber to review the National Minimum Wage Bill.

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The committee was chaired by Deputy Chief Whip of the Senate, Francis Alimekhena.

The Senate approval followed that of the lower chamber, House of Representatives, which equally approved N30,000 as national minimum wage in January.   




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