NECA, the umbrella body for organised private sector made this known while reacting to proposed increment through Mr. Timothy Olawale, it’s Director-General in a statement.
FG is proposing a VAT increment to 7.5% from the 5% currently being charged.
Olawale declared that the increase in VAT would erode the gains of minimum wage for low earners, and further weaken their purchasing power, among others.
He added that the increase in VAT would also have far reaching effects on manufacturers, businesses and consumers alike.
He maintained that business entities in the country were already saddled with several challenges, such as infrastructural decay and power, stressing that these had compelled some companies to close shop while others were still struggling to remain in business.
“The proposed increase in VAT would definitely lead to an increase in the cost of doing business, and would likely be passed to the consumers whose purchasing power is already weak.
“Government does not have to increase VAT in order to enable it pay minimum wage. However, in the event that government must increase VAT against the will of the people, it should be limited to luxury or ostentatious goods only.”
He faulted the comparison of VAT rates with other countries as being irrelevant due to the fact that business operating conditions in those climes were more clement than what obtains in Nigeria.
As a way out, the NECA boss aligned with the recommendation of Mr. Babatunde Fowler, the Chairman of Federal Inland Revenue Services (FIRS), who canvassed for capturing of more individual and corporate entities in the tax net paying VAT.
He also charged the government to reduce its recurrent expenditure, cost of governance, widen the tax net in its bid to generate more revenue and ensure effective collection of taxes from non-compliant citizens or defaulters.
Rather than bothering business entities with more taxes, he called on the government to create an enabling environment for them to thrive in order to continue to contribute to the growth of the nation.