Ms. Zainab Ahmed, Minister of Finance, Budget and National Planning, says that the proposed increase in Value Added Tax (VAT) will have a greater impact on the consumption of urban communities and the richest sectors of the population.
Latest Nigeria newspaper report that Ahmed, who said this at the 25th Nigerian Economic Summit in Abuja on Monday, explained that the proposed tax increase would not affect the poor masses as some people perceive.
The 2019 summit has the theme: “Nigeria 2050 Shifting Gears”. The proposed increase in VAT will probably impact the consumption of urban communities and the richest sectors of the population more than the poor,” he said.
According to Ahmed, his ministry will coordinate its fiscal policies with the current strict monetary policy of the Central Bank of Nigeria (CBN) to ensure that the appropriate results are achieved in terms of growth, consumption and inflation.
However, he said that Nigeria’s VAT contribution to the nation’s Gross Domestic Product (GDP) had declined from one percent between 2010 and 2013, to 0.8 percent between 2015 and 2018, reports NAN.
“This is significantly below the median of five percent of GDP in other comparable African countries.
“Nigeria’s low VAT to GDP is attributable to the low nominal VAT rate, which at five percent is the lowest in the African region, with an average of around 16 percent.
“In addition, the efficiency of VAT collection at 0.2 is well below the African regional average of 0.33,” he explained.
The minister also stressed the urgent need to design policies that address population growth, guarantee the paradigm shift to a competitive private sector that leads economic growth and development.
He explained that the Summit’s agenda was to provide strategic and innovative ways to obtain maximum benefits from the expected demographic dividends.
The minister said when he reflected on the theme of the Summit and the projections for the future of the country: “I would like to ask this question: how do we want our future Nigeria to be and how will we finance it sustainably?
“I see a future in which most Nigerians have been removed from poverty in a sustainable manner and have access to fundamental services that include education, medical care, water supply and sanitation.
“A future in which everyone is financially included with affordable access to financial products and services, a future in which we have no one behind.
“I see a future in which our young and vibrant population is well educated (particularly in education in Science, Technology, Engineering, Arts and Mathematics, creating a workforce with the skills that position our youth well to have a paid job) .
“This includes high-value digital jobs that will not only leverage but also boost the unlimited global digital economy,” he said.
The minister expressed the hope that the country will witness an advanced high-tech manufacturing sector that is competitive worldwide and that can guarantee the added value for natural endowments of raw materials.
He also anticipated a safe environment where people and businesses moved freely and without fear to carry out their commercial, work and other daily activities.
Ahmed said that the future he craved would not be created by luck, nor would it be created by the Federal Government or by state governments alone, but would require the collective action of all stakeholders, including citizens and the private sector.
He said the private sector had a crucial role to play and that the future would require specific integrated reforms, difficult decisions, a radical change in today’s culture, including attitudes towards taxes and public finances.
“As the saying goes” there is no gain without pain “, I must say that the trip will be very hard and will require sacrifices on all sides, including the government, the private sector, citizens and other interested parties.
“The future requires large financial investments in multifaceted physical and social areas by federal, state and local governments to be able to provide quality, useful, accessible and affordable education, medical care, transportation, housing, electricity and water.
“We must be able to provide digital connectivity and innovation, and overcome the tide of disruption that will bring the Fourth Industrial Revolution,” he added.