The Nigeria Employers' Consultative Association (NECA) has rejected calls by President Muhammadu Buhari to state governments to increase Value Added Tax (VAT) in order to increase their Internally Generated Revenue (IGR).
The group said, yesterday, that such move would do more harm to the already burdened private sector.
Speaking in Geneva, capital of Switzerland, where the International Labour Organisation (ILO) conference is holding, NECA Director-General, Mr. Timothy Olawale, stated that though the president meant well by urging state governments to increase their Internally Generated Revenue (IGR), considering the reported over N2 trillion in bailout funds to many of the states, increase in VAT or any other form of tax as a way to increase IGR at this time is not only misplaced, but will do more harm to the already burdened private sector and further impoverish the citizens that the president promised to take out of poverty.
Olawale e said that state governments cannot unilaterally increase VAT without amendment to 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 the state governments, he noted that "what needed to be done by the governments and indeed the Federal Government in an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as has been posited, arguably as 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 its way into government coffers."
"Finally as reiterated over and over again they should drastically cut the cost of governance. Several unnecessary retinues 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," Olawale said