Giving the federal government crave for more revenue accrual in a medium term effort against the oil price fall, there emerged a likelihood of value added tax (VAT) rate to be review upward and more necessary goods and services items to attract VAT payment should the legislature give a positive response to that aspect of the 2015 budget proposal.
This came as the ministry of finance and coordinating economy minister, Dr Ngozi Okonjo-Iweala, hinted the National Assembly on the need to see what opportunities exist with VAT to earn more revenue in the medium term measures.
According to her brief presentation of the 2015 budget proposal before National Assembly as posted on the budget office site, she said “In the medium term, it will be important to focus on tax policy to see where opportunities lie to streamline and rationalize certain taxes and levies whilst looking to boost others.
Continuing, Okonjo added “For example, Nigeria has one of the lowest VAT rate in the world and medium term efforts must involve the legislature to see what opportunities exist with VAT which largely benefits states.
“Whilst state governments get 85 percent of VAT, the federal government gets just 15 percent. A 5 percent increase in VAT rate for instance, would yield N614 billion, most of which would go to the states and local governments.
“I believe that the discipline these new measures impose will go a long way to support the economy and provide Nigeria a responsible pathway to overcoming the limitations of falling oil revenue without
disproportionately affecting the poor-to-middle class.”
Even though some It could be recalled that an attempt in the past by National Assembly to increase VAT rate received opposition from the Chattered Institute of Taxation of Nigeria, Organized private sector, the Nigerian Labour congress and even the state governments who are the major beneficiaries of the revenue from VAT.
Of recent, many states government are crying of inadequate fund from the federation account. This has led to owing of state for at least five months to date by some state government. Also there was outcry for the delay in December salary payment by federal government.