The government of Nigeria’s move to raise value added tax (VAT) from 7.5 percent to ten percent is ill-timed and anti-people.

Development Diaries reports that according to the Chairman of Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, the planned increase would not be applied to some critical sectors.

Oyedele further explained that his committee’s proposal for VAT increase is to reduce the rate to zero percent for food, health, education, and exemption for rent, transportation, and small businesses, while the upward rate adjustment is on other items to partly offset the reduction in rate.

However, the proposal is anti-people given Nigeria’s economic woes and the situation of the impoverished populace.

What is the point of reducing VAT on some items while increasing on other items? Besides, what are the other items that have no effect on the ordinary citizens?

An increase in VAT would worsen the financial burden already overwhelming Nigerians.

Recall that President Bola Tinubu launched fiscal policy committee in August 2023 as part of the federal government’s ongoing tax reform initiative, and the committee was tasked with creating a new tax framework to drive economic growth and development across the country.

Why the need to further tax overburdened citizens when measures have not been taken to alleviate their suffering?

With the current economic challenges, including fuel scarcity, a spike in fuel prices, and soaring inflation, many Nigerians are struggling to make ends meet.

The timing of this proposal is particularly problematic. The nation is grappling with an economic downturn that has left many businesses struggling to survive.

Increasing VAT at this juncture could stifle consumer spending, which is crucial for economic recovery. Businesses, especially small and medium enterprises (SMEs), might face reduced demand for their products and services as consumers cut back on spending.

Lastly, the proposed increase could undermine public trust in the government’s ability to cater to the well-being of the people, especially when they see little improvement in public services or infrastructure.

Development Diaries calls on the tax reforms committee to instead focus on improving tax collection efficiency and cutting unnecessary expenditures.

Photo source: Taiwo Oyedele