Nigeria is experiencing a vicious circle on revenue at the moment. Unfortunately, increasing VAT on the people will not fix that paralysis: “The Nigerian National Assembly is weighing a comprehensive bill that proposes a notable shift in Nigeria’s tax structure, specifically aimed at increasing the value-added tax (VAT) from 7.5 percent to 10 percent by 2025. According to The Cable, the bill, which outlines a phased approach, suggests that the VAT rate will continue to rise to 12.5 percent by 2026 and will eventually reach 15 percent by 2030.”
Yet, realistically, there are limited options on how to fix the mess. Nigeria lost more than N1.7 trillion of manufacturing sector revenue as recent policies reshaped the economy, according to the Chairman of the nation’s tax agency. Within that N1.7 trillion is billions of Naira of lost tax revenue! MTN Nigeria which used to be a rainmaker for Nigeria’s national purse lost N137 billion in 2023, N392.69 in Q1 2024 and N175.6 billion in Q2 2024.
If you understand how business works, more than 80% of major non-banking institutions in Nigeria will not pay taxes for years in Nigeria. But the government has bills to pay. So, jacking up VAT is a reaction to that reality. Unfortunately, I wish we do not choose escalating mass poverty with more taxes on already over-taxed citizens.
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Would anything happen if we close the House of Reps and have only the Senate? Would anything happen if the government consolidates all the federal universities into 12 universities, saving costs? Would anything bad happen if we trim down the federal workforce? Would anything bad happen if the government cuts down its expenses? Of course, how can you say that Nigeria does not have money when we can embark on building a coastal road network of N12 trillion? Contradictions everywhere
Nigerian Lawmakers Consider Bill to Increase VAT to 10% By 2025
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