ABUJA: Nigerians will soon begin to pay higher taxes in a move by government to shore up its revenue profile and augment the fall in crude oil income, Daily Trust can reveal.
A new tax regime which recommended for a much higher level of collection of taxes in the system is about to be approved by the National Assembly according to Daily Trust findings.
The proposed tax increase is contained in the Medium Term Expenditure Frame work (MTEF) and Fiscal Strategy Paper (FSP), approved by the senate two weeks ago.
Senators gave their nod on the tax increase when they approved the report of the joint committee on Finance, National Planning, Economic Affair and Poverty Alleviation chaired by Senator Ahmed Makarfi (PDP, Kaduna).
The committee in its report compared the tax to Gross Domestic Product (GDP) ratio for some selected countries arguing that Nigeria has the lowest ratio of 3.3 percent compared to an average of 13 percent among the nations sampled.
According to the National Bureau of Statistics (Nigeria), GDP is the market value of all officially recognized final goods and services produced within a country in a given period.
Minister of Finance Mrs Ngozi Okonjo- Iweala has already increased the collection target for the Federal Inland Revenue Service.
Okonjo-Iweala told The Wall Street Journal that the federal government plans to double its value-added tax (VAT) and cancel government projects if oil prices continue to slide.
“It will be a huge exercise,” she said. If oil prices continue to sink, it will also raise its value-added tax, which at five per cent to 10 per cent she said.
Sources in the lower chamber said Speaker Aminu Waziri Tambuwal and majority of members expressed stiff opposition to the increase as according to them “it is insensitive and will further subject Nigerians to hardship.”
“Nigerians have already started feeling the hit following Naira devaluation, fuel scarcity and now they want to increase VAT apart from other taxes that have been increased as a result of falling oil prices,” a lawmaker who spoke off record said.
