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NECA cautions FG over VAT increase

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VAT increase: NECA cautions FG

The Nigeria Employers’ Consultative Association (NECA) on Thursday faulted the timing of the announced increment of Value Added Tax (VAT) by Federal Government from five percent to 7.2 percent.

Mr Timothy Olawale, NECA’s Director-General, made this known in Lagos on Thursday.

Olawale said that the benefits of the recently signed National Minimum Wage of N30,000 would be neutralized by the proposed increase in the VAT.

The Federal Executive Council on Sept. 11 approved 7.2 percent as the new VAT rate for the country, up from the current five percent.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who spoke with State House Correspondents after the FEC meeting in Abuja, said consultations were in process over when the new rate would apply.

Olawale said the increment would further reduce the purchasing power of the citizens, lead to increase in prices of goods and services, increase inflation rate, and further contraction of the economy.

According to him, recently released data of the country’s GDP growth indicated a contraction in Q4, 2018 (2.38 percent), Q1, 2019 (2.10 percent) and Q2, 2019 (1.94 percent).

“Also, International Monetary Fund has recently revised downward its global economic growth forecast to 3.2% due to sluggish in global economy.

“Therefore, this suggests, that at such period of time, economies should be formulating fiscal measures/policies to stimulate their economies, ” Olawale said in a statement.

Olawale said that, since the purchasing power of the citizens would have been reduced, sales of goods and services would reduce and inventories for business would be high.

He said: “This can lead to closure of businesses that ought to be supported by government in reducing unemployment rate that is currently alarming. ”

The DG urged the government to double its efforts at expanding the tax net, reduce the income gap and improve the economy through more friendly fiscal policies and promote the ease of doing business in Nigeria.

“The government should bring up machinery in order to further increase the tax bracket, widen the tax net as the country is presently achieving less than 10 percent of its VAT potentials, ” Olawale said.

162 COMMENTS

  1. thank you very much they need to be told and caution becos their 3 square mill is regular at the expense of the peoples money vat hike.

  2. Comment: oh God deliver me and my family from the harsh economy of Buhari regime. how will one who is jobless survive this one that Buhari want to impose again, this is very bad and wickedly

  3. Dr. Olawale please tell this dumb govt. Even the new minimum wage has not been actualized and they are sharing it already.

  4. It is actually unyielding because purchasing power is already very low and the new minimum wage will do less purchase when finally implemented.

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