The Nigerian Employers’ Consultative Association (NECA) has reacted to the call by President Muhammadu Buhari on state governments to increase Value Added Tax (VAT) in an attempt to increase their Internally Generated Revenue (IGR).
Speaking in Geneva, the Swiss capital where the International Labour Organisation (ILO) conference recently took place, Mr. Timothy Olawale, Director-General NECA stated that “the president meant well by urging state governments to increase their Internally Generated Revenue (IGR).
“Considering the reported over N2 trillion in bail-out funds to many of the states, it was apt for the President to advise them to be innovative in increasing their IGR and at the same time prudent in their expenditures. However, the call for increase in VAT or any other form of tax as a way to increase IGR at this time is not only misplaced, it will do more harm to the already burdened private sector and further impoverished citizens that the President promised to take out of poverty”
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“Also, state governments cannot unilaterally increase VAT without the amendment of the Value Added Tax Act by the National Assembly.”
The NECA boss averred that “the common man will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb.”
While proposing a way out for state governments, Olawale noted that “what needed to be done by the state governments and indeed the federal government is an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as it’s been posited, arguably that less than 40% of Nigerians are tax compliant.
“Secondly the states should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find their way into government coffers.
“Finally as reiterated over and over again, they should drastically cut the cost of governance. Several unnecessary number of aides kept by them at prohibitive cost to the state are needless.
“Besides, ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by State government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses.”
