Nairametrics| The Federal Government has moved to increase the Value Added Tax on consumption of certain luxury items from the current 5% flat rate across goods. The Minister of Finance, Mrs. Adeosun, said this while briefing the media after the Federal Executive Council meeting held yesterday.

However, the details of the increase are still sketchy as Adeosun admitted that the National Assembly would have the final say on whether to implement the increase and what percentage to set for the items, if the increase was accepted.

“What the committee report has shown is that we should look at actually increasing VAT on some luxury items. At five percent, we have the lowest VAT and whilst we don’t think VAT should be increased on basic items, if you are going to drink champagne, for instance, in the UK, you drink Champagne, the VAT is 20 per cent. So, why should it be five per cent in Nigeria?

“So, they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately. And, I think that is a very valid and sensible suggestion which we are going to take to the National Assembly to see how we can implement it. But, as far as basic goods are concerned, no there will be no tax increase. I believe it is only fair that when you consume luxury goods, you should pay a little bit more.  The National Assembly will decide the percentage”.

This mirrors the efforts made by the Goodluck Jonathan administration to increase tax on private jets, yacht, champagne and other luxury items, which was not finally executed. If approved by the National Assembly, the increased VAT on luxury items will demonstrate government’s sincere willingness to correct the pro-rich tax system currently in place.

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