Should the Federal Government increase VAT to 10% as suggested by IMF?

Isaac Abiodun
Isaac Abiodun
Kaduna
In 2020, VAT was increased from 5 percent to 7.5 percent by the federal government. It will not be appropriate to attempt to raise it to 10 percent anytime soon. There are a lot of other things to consider. In this country, there are a lot of people and businesses that are exempted from tax and are given Customs waiver, many of which are just fronting outfit to launder money and evade tax. This should be looked into to have a better revenue from tax. Another thing to look into is government spending. A large percentage of our budget is used to finance governance, it is too expensive. There were promises of reducing government spending, but you and I know that is not the reality now.

Nigeria’s economy is bigger than a lot of other West African economies combined. We need not rush to heed such an advice. VAT is collected from every citizen in Nigeria directly or indirectly. As long as you buy basic commodities, VAT is included. Many people buy these commodities daily and more than once sometimes. What has the government done with the VAT, revenues and other taxes that they have been collecting in the past? Will people be motivated to welcome a new VAT rate without any form of resistance? What is the present economic and purchasing power of an average Nigerian?

We have a currency that is always dropping, a majorly consumer economy, a parallel market exchange rate and an overvalued exchange rate. All these when properly checked can be a way to raise huge sums to augment and finance our budget. There must be a commitment from the government to be more to an average Nigerian in terms of governance and policy implementation, increasing VAT is not one.

Jonathan
Jonathan
Lagos

Increasing taxes in a country where government does not spend efficiently should not be considered as best solution to deteriorating economic conditions. Improvement in government regulatory services could be considered to block leakages.

 

 

 

 

 

 

 

 

 

Chigozie Anoche
Chigozie Anoche
Lagos

I think it depends on the perspective everyone is looking at it. When there is increment in VAT, it will increase our internal revenue. But it will tell on the consumer pocket especially when the government are not using it efficiently to make life easier for the people.

 

 

 

 

 

 

 

 

 

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Olayemi
Lagos

The IMF’s recommendations are currently unimplementable because of the situation of Nigeria now. I oppose any further raise in VAT especially as Nigerians are currently dealing with the adverse impacts of the ravaging COVID-19 pandemic.

 

 

 

 

 

 

 

 

 

Chibuzo
Chibuzo
Abuja

We need to get out of this cruel cycle of devaluation and tax increases. Ordinarily we should be thinking for ourselves rather than wait for international bodies to help set our agenda after all we should know our economy more than anyone else. Increment of VAT is not the way forward at all because it is like inflicting pain on the masses.

 

 

 

 

 

 

 

Tope Opaleye
Abuja

Nigeria should strive to manage its foreign exchange policy well to avoid regular devaluation. Increasing VAT at a time when all countries in the world are implementing stimulus packages to their citizens is a harsh policy and could portray insensitivity on the part of the federal government.

 

 

 

 

 

 

 

 

 

 

Bello Mohammed
Bello Mohammed 
Lagos

Increasing VAT will only reverse the momentum of economic recovery the country is gradually experiencing. I do not understand why Nigeria is always at the mercy of international countries for help. Countries like Ethiopia have refused to devalue their currency despite their economic challenges.

 

 

 

 

 

 

 

 

Dare Osanyinlusi
Dare Osanyinlusi
Ekiti

I am against the recommendation that VAT be raised to 10 per cent in 2022 and 15 per cent by 2025. Such suggestion by the IMF is misguided if we think it is the magic bullet to fix our finances. Only 15 per cent of VAT goes to the federal government with the balance going to state and local governments. Increasing VAT will have very little impact on the structure of our finances. But much higher VAT will have a huge negative impact on majority of the population who are faced with falling per capita income

 

 

 

 

 

Uche
Uche
Abuja

The call for increase in VAT is ill-timed. With an already depressed economy facing a number of fiscal challenges especially very low growth, the increase in VAT will be detrimental to economic growth. The structural issues faced by manufacturers and producers already pushes up cost of production therefore the increase in VAT will further create inflation as the increased cost of production will be borne by the end user. This will reduce consumption especially for low-income households which make up the larger percentage of the Nigerian population. Lower consumption leads to lower growth. Ideally with government requiring more revenue, the increase in VAT may be justified but the utilisation of the increased revenue would end up going into recurrent expenditure, which would have no impact on development.

 

Chima Ogbonnaya
Chima Ogbonnaya
Abia

Devaluation of the naira and increase in VAT will lead to an embarrassing hyperinflation and make the standard of living more difficult by allowing for less disposable income. As a result of this, crime and poverty will pervade the entire country. The government should be able to tell IMF that we do not need their proposals. As a country, we need to know that whenever IMF comes up with proposals like this, they are proposing to favour their corporate objectives of ensuring their loans are repaid seamlessly and to favour the country to be able to fund their obligations.

 

 

 

 

 

Daniel Emonido
Daniel Emonido
Lagos

This is not the solution to our problem in Nigeria. The way forward is to reduce the country’s import dependency and strive to join the league of net exporting countries. Only then, will exchange rates unification make economic sense for Nigeria.  I must say that implementing this recommendation will spell doom for an economy in a recession still recuperating from the devastating effects of COVID-19 pandemic. The impression created by the IMF report is that the country’s economic woes would significantly vanish by removing forex restrictions and unifying exchange rates. Our major challenge as a country lies in its import-dependent nature and over reliance on oil revenue, which accounts for about 90 per cent of forex inflows.

 

 



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