The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has urged the incoming administration to increase the Value Added Tax (VAT) from the current 7.5 per cent to 10 per cent, saying this would stimulate the country’s economic growth.
The minister made the call during a courtesy visit to the headquarters of VON in Abuja.
Ahmed said: “VAT was one of the ways to increase revenue and we still have to increase VAT because at 7.5 per cent, Nigeria has the lowest VAT rate in the world, not in Africa, in the world. In Sub-Saharan Africa, the Africa average is 18 per cent, when you increase your VAT, your Gross Domestic Product (GDP) will grow.”
She noted that the government had used the finance bills to block leakages, strengthen the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service, adding that the government has also done automation of the two institutions through the process.
The minister also disclosed that the federal government would remove the controversial petrol subsidy before the end of President Muhammadu Buhari’s tenure on May 29, 2023.
Ahmed attributed the delay in removal of the subsidy, as provided for in the Petroleum Industry Act (PIA) 2021, to the 2023 general election and the forthcoming national population census.
But the federal government, on Wednesday, disclosed that no conclusion had been reached on how to mitigate the effect of the proposed fuel subsidy removal on the citizens.
She added that the subsidy cost per litre of petrol ranged between N350 to N400, maintaining that Nigeria spends about N250 billion monthly on subsidy.
She said subsidy removal was a difficult political and economic decision for the government to take. But the minister said almost everyone had now agreed that subsidy was not serving the people it was supposed to serve and its high cost was adding to government’s deficit.
A development expert and Executive Director, Centre for Fiscal Transparency and Integrity Watch (CefTIW), Umar Yakubu says the recent announcement by the federal government to remove fuel subsidy by May 29 should not be taken seriously by Nigerians.
Speaking to Daily Trust while reacting to the report, Yakubu noted that in all the promises the current government has made in the oil and gas sector, they have not kept a single one.
His words: “Recall in 2015, Minister of State, Petroleum Resources, Ibe Kachukwu promised to fix the refineries and non has been done, They also promised to do modular refineries, nothing is efficiently functioning.
“If you also recall, about two years ago, this government borrowed over a billion dollars to fix refineries, and we don’t know how much has been borrowed so far and how much will be released all we know is Nigeria will pay interest on the loans,” he said.
He noted that the statement of the Minister of State for budget and national planning, Prince Clem Agba saying there is no arrangement for palliatives is not also surprising.
“After all the promises and failures, if this government comes out to tell you they haven’t promised palliatives when they remove subsidy is not surprising.”