By Tony Obiechina, Abuja
The Tax Justice and Governance Platform, (TJGP) Nigeria and other Civil Society Organizations (CSOs) have warned that the recent increase in Value Added Tax (VAT) announced by the Federal Government will worsen the present poverty level in country as well as increase inequality.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed had while briefing journalists after the Federal Executive Council meeting in Abuja on Wednesday, announced government’s plan to raise the current rate VAT.
But in statement jointly signed by the CSOs in Abuja on Friday, warned of the social implications of hiking the VAT rates.
The CSOs involved include, Christian Aid; Action Aid Nigeria; Centre for Democracy and Development; Civil Society legislative Advocacy Centre; OXFAM Nigeria and Imo state Tax Justice and Governance Platform.
Full text of the statement reads: “A group of civil society organizations advocating for the promotion of a progressive, fair and transparent system in which domestic resources are effectively mobilized through an efficient tax system, utilized for people oriented development and provision of essential services that benefit majority of citizens, including the poor and disadvantaged groups.
“We have followed with keen interest, the trend around the Federal Government’s effort to improve revenue mobilization to fund development in Nigeria. There has been diverse’ views from different interest parties on which measures will be more strategic and sustainable.
“Finally, the minister of finance announced an increase in the VAT rate at the last Federal executive council held on the 11th of September 2019 after several denials of the possibility of an increase in VAT in Nigeria.
“We want to state our position for advocacy and campaign which is that Government designs and implements policies and programmes that enhances the welfare of the poor and protects disadvantaged groups that constitute much of the Nigerian population and address issues of inequality.
“As has been demanded by many Nigerians and groups, we call on the federal government to pay serious attention to widening the tax net rather than increasing the rate which will only place more burden on the few that complies already and still exempt the majority that do not pay taxes.
” We welcome the VAIDS as opportunity to increase the tax net, though it has not yielded the optimum result expected. 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.
“Given the implication of increasing the VAT, we would want the FG to consider following issue areas; Who bears the burden of the tax increment? What main drivers could inform and/or justify the decision for a VAT increment? What are the real issues around VAT: Remittance (collection) or Rate?
“How well has the little been used and what are the assurances that an increase would alleviate economic conditions? What systematic measures have been taken to ensure tax compliance? Are there no other options available to the government to mobilize revenue?
” The Platform therefore calls on the federal government to provide additional information and details on the proposed measures for the purposes of public debate and multi-stakeholder input. 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. .” The Platform hopes that the proposed measures can be effectively implemented to solve the revenue deficit in the country rather than an increase in rate which will only exacerbate poverty and hunger on the “ultimate burden bearer” – the poor and vulnerable.
“We call on the federal government to concentrate more efforts at ensuring proper collection of appropriate tax from multinationals and large corporations which have continued to benefit from undeserved tax incentives and had for years engaged in tax avoidance practices. we call on government and relevant institutions to develop strategies to curb the tax avoidance practices of big businesses in the country and pay attention to challenges of illicit financial flow that had continued to undermine the economy.
“We call on all Nigerians, especially civil society, the media, labour and citizens working in the development sector and public finance management to continue to raise their voices against measures and policies that will further impoverish Nigerians and introduce new dimensions of inequality”.
