Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed has said the proposed Value Added Tax (VAT) increase will have a negative effect on consumption by urban communities and the richer sections of the population.
Mrs Zainab, who disclosed this at the 25th Nigerian Economic Summit in Abuja on Monday, revealed that the tax increase would actually not affect the poor masses.
The 2019 summit was themed: “Nigeria 2050 Shifting Gears” and a lot of prominent Nigerians were present.
She added that with moves like this, she sees a future with lots of Nigerians being taken out of poverty.
Her words, “The proposed VAT increase is likely to impact more on consumption by the urban communities and the wealthier sections of the population than on the poor.”
“This is significantly below the median of five per cent of GDP in other comparable African countries.
“Nigeria’s low VAT-to-GDP is attributable to the low nominal VAT rate, which at five per cent is the lowest in the African region which averages at about 16 per cent.
“Furthermore, the efficiency of VAT collection at 0.2, is well below the African regional average of 0.33.”
“I will like to put out this question: what do we want our future Nigeria to look like and how will we sustainably finance it?
“I see a future where the majority of Nigerians have been sustainably lifted out of poverty and have access to fundamental services including education, healthcare, water supply and sanitation.
“A future where all are financially included with affordable access to financial products and services, a future where we have no one behind.
“I see a future where our young and vibrant population is well educated (particularly in Science, Technology, Engineering, the Arts and Mathematics education, creating a workforce with the skills that well position our youth to be gainfully employed.
“This includes high value digital jobs that will not only tap into but also drive the limitless global digital economy.”
“Just as the saying goes ‘no pain no gain’, I must say, the journey will be a painstakingly tough and will require sacrifices on all sides- including government, the private sector, citizens and other stakeholders.
“The future requires huge financial investments on multi-faceted physical and social areas by the Federal, State and Local Governments to be able to provide quality, useful, accessible and affordable education, healthcare, transportation, housing, electricity, and water.