In a bid to enhance revenue of the country, the federal government has approved the new National tax policy. Chief among the revisions is an increase in Value Added Tax (VAT) for luxury items such as champagne. The government is working towards an immediate increase in VAT for luxury items. The new policy, is subject to the approval of the national assembly. Kemi Adeosun, minister of finance disclosed this after yesterday’s Federal Executive Council (FEC) meeting. The meeting was chaired by Vice President Yemi Osibajo.
She also stated that at its current rate of 5%, Nigeria has one of the lowest value added tax regimes in the world%. Previous suggestions for a blanket increase in VAT to 10% during the administration of President Goodluck Jonathan had lead to uproar among the business community. Tax contribution to GDP currently stands at about six percent. The last amendment to the VAT was in 1994 by the regime of General Sani Abacha.
Other proposed reforms to the tax policy include a mandate for the Independent National Electoral Commission (INEC) to mandate political parties to articulate tax agenda during elections, a dedicated tax policy website, and the setting up of a tax policy implementation committee. The Joint Tax Board (JTB) will also be given be a role beyond its current advisory role.
A drop in crude oil prices and persistent attacks by militants in the oil rich Niger delta, led to Nigeria going into a recession for the first time in well over a decade. The three tiers of government were unable to meet revenue projections and in many cases have led to unpaid salaries and pensions for workers.