The Federal Inland Revenue Service (FIRS) has announced it will increase the Value Added Tax (VAT) by between 35 and 50 per cent in 2019. This move comes a day after Nigerian legislature approved the N30,000 minimum wage.
The Chairman of the Revenue service made the disclosure when he and other top officials in the Federal Ministry of Finance appeared before the Senate Committee on Finance in Abuja, on Tuesday, March 20, 2019.
The officials appeared before the committee to give details of the 2019-2021 Medium Term Expenditure Framework and Fiscal Strategy Paper, this is according to the News Agency of Nigeria.
The increase in the VAT, if in fact increased between 35 per cent and 50 per cent, the current five per cent will rise between 6.75 and 7.25 per cent.
Senate increases minimum wage increase
The hint of a possible increase in VAT was announced shortly after the Senate passed the National Minimum Wage Act (Amendment) Bill in which it approved N30, 000 as the new minimum wage for the workers in the country. As earlier reported, the members of the House of Representatives also agreed to the new wage bill.
Making the minimum wage increase worthless: With the decision to increase VAT, the Federal Government has just shot a plane mid-air, crashing the relevance of the increment in minimum wage. This will affect the prices of household goods as well as increasing the cost of living, as VAT registered companies will transfer the VAT expense on its consumers by raising the value of their goods and services.
So as far as the VAT increase is likely to take effect in 2019, it’s back to square one for the Nigerian workers. The reason for the call to increase minimum wage was due to the inability of the N18, 000 to meet daily needs, but if the minimum wage and VAT are increased simultaneously, then Nigeria will for many years retain its position as the world’s poverty capital.