The Minister of Budget and National Planning, Mr. Udoma Udo Udoma, has clarified his position on the reported anticipated increase on the Value Added Tax (VAT) saying that what he said was that the Federal Government has set up a Committee to seek sustainable sources of revenues to fund the minimum wage.
Udoma, was reacting through his media aide, Mr. Akpandem James, to a story that ‘FG may hike VAT by 50%, which was published yesterday, March 19, 2019 by Newdawn and others and attributed to him.
Reacting to the story, Mr. James said, “I think there is a mix up in the presentation of the story on ‘FG to increase VAT, other taxes…”.
“It was the chairman of FIRS that talked about a probable increase in VAT as part of initiatives to increase revenue to enable the Federal Government carry out and fund critical infrastructure projects; while Udoma talked about a Federal Governement Committee which has been set up to seek sustainable sources of revenues to fund the minimum wage. Udoma never talked about increasing VAT rate to 50% or any percentage for that matter, he only mentioned in passing that government might consider increasing VAT on LUXURY items as part of ways to grow FG revenues. And this is not new. It’s been there since the days of Kemi Adeosun who spearheaded the proposal. It’s only that government delayed the implementation, which was why Udoma said government might consider implementing the taxing of luxury items, but in saying so, which was a response to an issue raised by one of the committee members, Udoma emphatically said government must be cautious in defining what is luxury items so that it would not affect items also used by the common man. He mentioned Smart phone, for instance, as an item that may ordinarily be seen as luxury, but which is also used by the majority of the people.
“So reporting that Udoma said FG is considering increase in VAT to 50% is not correct, it was the chairman of FIRS that suggested it. VAT is a revenue item and revenue items are handled and commented upon by the Ministry of Finance of which FIRS is part, and not the direct business of the Ministry of Budget and National Planning.
“In fact, the Reporters completely misquoted Fowler’s presentation. Fowler said that the FIRS’ effort will yield at least 35 to 50% increase in VAT returns as well as appreciable increase in Company Income Tax and Petroleum Tax profit this year because FIRS has done more work to bring more companies into the tax net. He did not say the government will increase VAT payable by Nigerians to 50%, it was the performance for this year that he was taking about.
“I’m told Fowler spoke with reporters after and explained further that the FIRS was considering a 35 to 50 per cent increment on the current rate; but the Minister’s name should not have been associated with it because the Minister declined to speak on the matter when the was approached by reporters because VAT is not under his ministry.”
