Raise VAT to 7.5%, RMFAC Tells FG | Independent Newspapers Limited
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Raise VAT to 7.5%, RMFAC Tells FG

VAT
Posted: Jul 15, 2016 at 4:30 am   /   by   /   comments (0)

Isuma Mark

Abuja – The Federal Government has been urged to increase Value Added Tax (VAT) from 5 to 7.5 percent to shore up the country’s revenue base.

This call was made on Thursday in Kano by Mr. Shettima Gana, the Chairman, Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), at a two-day National Revenue Retreat.

Speaking on the new strategies that can expand the revenue base of the government, Gana said that Nigeria’s current VAT rate of 5 percent was very low.

According to him, the charge being collected on goods and services in the country was one of the lowest in the world.

He cited neighbouring Niger’s VAT of 19 percent as one of the reasons Nigeria needs to increase her VAT.

He called on the Federal Government to initiate process that would enable increase in VAT between 7.5 percent and 10 percent.

“VAT is a major source of revenue and could be used to shore-up revenue required for financing the ever-expanding public expenditure and the needs of all the tiers of government,” Gana said.

A comprehensive research should be initiated, he said, to collect data from the Corporate Affairs Commission (CAC), banks, and state ministries of trade and others to determine and capture all possible VAT targets.

He added that taxation was seen globally as the most stable source of government revenue for economic development, yet it is not being properly utilised in Nigeria.

He called on the Federal Government to introduce additional taxes, such as toll tax for road, luxury goods tax on mansions, exotic cars, private jets and jewelries.

Also, the government should introduce inheritance tax, which would be paid by a person who inherits money or property from dead relations, he noted.

As additional sources of income, he said it was imperative to develop agriculture, mining and tourism sectors, which, he noted, are possible huge revenue sources for the government.

According to Gana, government should enhance collection efficiency of taxes and block leakages in revenue collection.

As a way to ensure efficient method, he urged the government to beef up revenue monitoring and intelligence gathering.

With the introduction of new taxes, he said, government would generate more revenue to ultimately expand the economy, which could as well create employment.

Speaking at the event, Mr. Bakari Wadinga, the Director, Revenue and Investment in the office of the Accountant-General of the Federation, said there was urgent need to harmonise Personal Income Tax (PIT) collection.

According to him, Federal Inland Revenue Services (FIRS) should be allowed to take over the collection of PIT and should model it after VAT collection.

He stated that the current practice where every state collects its own PIT was not only ineffective but also leads to huge revenue loss.

“It would be recalled that prior to the introduction of VAT in 1993, it was the sales tax which was being collected by state governments.

“In 1992, the total collection by the entire states of the federation put together was less than N300 million, but by 1994, when VAT came into effect, the total VAT collections rose to N7 billion,” he explained.