NLC, NECA reject FG's proposed VAT increase from 5 to 7.2 percent
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NLC, NECA reject FG's proposed VAT increase from 5 to 7.2 percent

- Nigeria Labour Congress (NLC) rejected the federal government's proposed VAT increase from 5% to 7.2%

- The labour union said planned increase in VAT would erode any benefit the increase in the new national minimum wage would bring to workers and Nigerians

- According to NLC, the government should widen the tax net and get people to pay tax, rather than over-tax those that are in the net already

The Nigeria Labour Congress (NLC) has reportedly rejected the federal government's proposed increase in Value Added Tax (VAT) from 5% to 7.2%.

According to a report filed by Nigerian Tribune, the labour union said the planned increase in VAT would erode any benefit the increase in the new national minimum wage would bring to workers and Nigerians.

It, therefore, advised the government to widen the tax net and get people to pay tax, rather than over-tax those that are in the net already.

Nigerians react as FG increases VAT to 7.2 per cent

NLC's general secretary, Comrade Emmanuel Ugboaja, said the congress has rejected the plan and warned that its impact on Nigerian manufacturers, job creation and retention, will be negative.

He said: “We reject the increase as it clearly seeks to erode whatever purchasing power the minimum wage may bring. We see it as a move not well thought through with the welfare of Nigerian wage earners in mind.

“Its impact on Nigerian manufacturers and job creation and retention will be nightmarish. It is clearly insensitive to the plight of the ordinary Nigerian. What the government needs to do is to widen the tax net and get people to pay tax and not to overtax those that are in the net as of now.”

Similarly, the Nigeria Employers’ Consultative Association (NECA), cautioned the government against the timing of the announced increase of VAT from 5% to 7.2%.

The director-general of NECA, Timothy Olawale said: “The benefits of the recently signed National Minimum Wage of N30,000 would be neutralized by the proposed increase in the VAT, further reduce the purchasing power of the citizens, leading to increase in prices of goods and services, resulting in upward movement of the inflation rate, and further contraction of the economy.”

FEC approves increase in VAT rate to 7.2%, to take effect in 2020

Olawale also pointed out that the move may lead to closure of businesses as Nigerians' purchasing power will be reduced.

He noted that the VAT increase should have been limited to luxury or ostentatious goods only if the government is bent on effecting the increase.

Olawale also advised the government to work on expanding the tax net, reducing the income gap and improving the economy.

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Earlier, Legit.ng reported that the Federal Executive Council (FEC) approved the increase in Value Added Tax (VAT) rate to 7.2% from its previous 5%.

The minister of finance, budget and national planning, Zainab Ahmed, made this known to journalist at the state house after the FEC meeting on Wednesday, September 11.

It should be noted that the new development is still subject to an amendment of the 1994 VAT act by the National Assembly.

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