Nigeria: CSOs Caution Govt Against Increase in VAT

26 September 2019

The Tax Justice and Governance Platform, (TJGP) Nigeria, a group of civil society organizations has called on the federal government to apply caution in its desire to increase Value Added Tax (VAT).

TJGP in a statement signed by Civil Society legislative Advocacy Centre (CISLAC), Oxfam Nigeria and others and made available to THISDAY, called on the federal government pay serious attention to widening the tax net rather than increasing the rate which would only place more burden on the few that complies already and still exempt the majority that do not pay taxes.

TJGP in the statement further lauded the VAIDS as opportunity to increase the tax net, though it has not yielded the optimum result expected, adding that there are still myriads of companies and other taxable entities in Nigeria who are not in the tax net and still not convicted or punished in any way.

TJGP urged government to consider who bears the burden of the tax increment, the main drivers could inform and/or justify the decision for a VAT increment, the real issues around VAT; remittance (collection) or rate and others.

The platform therefore appealed to the federal government to provide additional information and details on the proposed measures for the purposes of public debate and multi-stakeholder input.

According to the statement, "We expect empirical projections and evidence based expected outputs that indicate that the tax yield from some of the measures would outweigh any disadvantage and potential negative impact and that the majority of Nigerians will be the ultimate beneficiaries of the proposed measures. These includes reducing the tax incentives granted to multinationals which is not even much of a contributor to their existence in the Nigerian business environment. Consider full digitalization of the processes of tax administration to curb leakages in the system. Support the establishment of the beneficial ownership register in Nigeria as a measure to know people's real worth and what they are liable to pay as tax. Fully implement the BVN policy as a measure of tracking peoples' tax liabilities especially the high net worth individuals in the country who has been alleged of not paying taxes at all.

"We use the forum to call on the federal government to again beam its searchlight on illicit financial flows from Nigeria as it represents a source of substantial revenue leakage and loss to government, with a bid to devising practical strategies for preventing the outflows as a way of also capturing revenue due to government and made available to provide services the citizens.

"We call on the federal Ministry of Finance to ensure that its increase in the revenue targets to the Federal Inland Revenue Services is based on empirical computations and is not emotional or arbitrary projections, neither should it hinge on speculation and should ensure that the FIRS is not compelled to impose hardships on hapless Nigerians in a bid to generate taxes to meet unrealistic targets.

"The platform calls on the federal government to improve market information and transparency by implementing the National Tax Policy, promoting the commitment to progressive taxation and taking measures to improve financial transparency while cooperating with regional and international bodies to address the issues of illicit financial flows."

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