Ebun Francis
Mrs Kemi Adeosun, Nigeria’s Minister of Finance, Wednesday said the federal government plans to raise the value-added tax (VAT) on luxury times — subject to the approval of the national assembly. The revised national tax policy, according to her, was approved by the council to address the issue of low taxation in the country.
The Minister made the disclosure while briefing Journalists at the end of the federal executive council meeting presided over by Vice-President Yemi Osinbajo.
Nigerians currently pay 5% VAT, one of the lowest in the world, introduced in 1994 by the military government.
According to Adeosun, “What the (review) committee report has shown is that we should look at actually increasing VAT on some luxury items. At 5% we have lowest VAT.
“And while we don’t think VAT should be increased on basic items, if you are going to drink champagne, for instance… in the UK you drink champagne the VAT is 20%, so why should it be 5% in Nigeria.
“So they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately. And I think that is a very valid and sensible suggestion which we are going to take to the national assembly to see how we can implement it.
“But as far as basic goods are concerned, no there will be no tax increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. The National Assembly will decide the percentage.”
The new national tax policy, a revised version of the 2012 edition, will capture all existing taxes.
The new policy, as proposed by the ministry of finance, seeks to entrench an efficient tax system and address the low tax-to-GDP ratio, which at 6% is one of the lowest in the world.