Nigeria: Govt to Increase VAT, Adjust 2019 Budget

The Nigerian Senate
20 March 2019

The Federal Government would send request to the National Assembly for adjustments to the 2019 budget to reflect ways of sourcing funds to pay the new national minimum wage which was approved by the Senate yesterday.

Minister of Budget and National Planning Udoma Udo Udoma said this yesterday during an engagement with the Senate Committee on Finance on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The minister said government had plans to constitute a panel that would come up with ways of increasing revenues to meet up with the new minimum wage, adding that a new request is to be forwarded to the legislature in that regard.

He said the current budget size of N8.83 trillion may increase due to the adjustments to take care of the new minimum wage.

Udoma also told the Senate committee that the panel, when constituted, would be tasked with the responsibility of negotiating with workers above the minimum wage bracket with a view to easing the payment.

"It would be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the minimum wage. Every five years, it is supposed to be reviewed. It has not been reviewed, even though there is no doubt that for both the Federal Government and states, it is a tough time to review wages.

"But the N18,000 is really too low. And it is difficult for people to manage on N18,000. So the President supported a revision, but it is important that as we are revising, we make sure that it can be funded. That is why we set up the Bismark Rewane Technical Committee.

"So we will be coming to you (National Assembly). There may be some changes maybe in VAT and other things. But we will be coming to you in other to make sure that we can fund the minimum wage. Not just fund the minimum wage but as you announce it, you now enter into negotiations with those above the minimum wage and we have to be prepared for that.

"It is something we are going to work closely with the Finance Committee on how best this minimum wage will be addressed, both from the Federal Government and the states to ensure that the whole government apparatus is not just paying salaries and nothing else. It is important that we are able to pay the minimum wage and still have enough resources to do infrastructure," he said.‎‎

Also speaking during the session, the Federal Inland Revenue Service (FIRS) hinted at an imminent increase in the Value Added Tax (VAT) from the current five percent to about 6.75 percent and 7.25 percent.

Fowler told the committee that this is to meet up with the agency's revenue target of N8trn for 2019.

He said: "By the end of this year, we should be ready for increase in VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. And they pay when they go for those trips. We should be ready for an increase on VAT.

"I can certainly see an increase in VAT of at least 35 percent to 50 percent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax (CIT) and also on Petroleum Profit Tax (PPT)," he said.

'N30,000 wage implementable'

Meanwhile, the Senate joined the House of Representatives in approving N30,000 as minimum wage for workers against the N27,000 proposed by the Executive arm.

The approval followed the adoption of the report of the ad hoc committee on the National Minimum Wage chaired Deputy Chief Whip Francis Alimekhena (APC, Edo).

Before the approval, some senators said they believed the new minimum wage was implementable in view of recent happenings in the states.

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