ADVERTISEMENT

How FG generated N3.62trn from VAT in 4 years

Babatunde Fowler, FIRS Chairman
Babatunde Fowler, FIRS Chairman
  • …Data shows tax net expanding

 

The Federal Government has generated a total of N3.62 trillion from Value Added Tax (VAT) in the last four years.

ADVERTISEMENT

Data sourced from the National Bureau of Statistics (NBS) showed that the value of VAT collected by the Federal Government has been on the rise from 2015 after President Muhammadu Buhari assumed office to 2018.

Analysis of the data showed that in 2015, the government generated a total of N759.43 billion from VAT, but this value rose to N777.51 billion in 2016.

ADVERTISEMENT

In 2017, the value of VAT collected rose further to N972.35 billion before it hit N1.11 trillion in 2018.

The value of VAT collected in 2018 was the highest ever recorded in Nigeria’s history, but the Federal Inland Revenue Service (FIRS) does not seem satisfied with the collection so far.

The FIRS puts Nigeria’s VAT rate from 6.75 per cent to 7.25 per cent, as one of the lowest in the world.

Recently, the FIRS hinted of the possibility of a 35 per cent to 50 per cent hike in VAT rate in order to fund the country’s recurrent expenditure.

The recurrent expenditure is expected to balloon as a result of the N30,000 national minimum wage increase, which President Buhari is likely to sign into law.

This implies that the N8.83 trillion proposed for 2019 expenditures at the federal level may increase when the wage bill is revised to accommodate the new minimum wage.

While the FIRS considers a hike in VAT rate, it is worth noting that the consistent rise in the value of VAT collected in the last four years shows that VAT collection in Nigeria has been under optimum in the past and if the government’s revenue agency sustains the current tempo, VAT collections may rise further.

Data analysis shows that non-import VAT collected locally totalled N1.97 trillion from 2015 to 2018.

Daily Trust observes that non-import VAT collected locally has also been on the increase, rising from N469.84 billion in 2015 to N474.02 billion in 2016.

In 2017, non-import VAT collected locally also rose to N510.65 billion before hitting N517.61 billion in 2018, being the highest value recorded in the last four years.

Within the four-year period, the foreign component of non-import VAT totalled N791.30 billion.

Analysis of the foreign component of non-import VAT shows progressive increases in value from N119.67 billion recorded in 2015 to N125.63 billion in 2016, N259.70 billion in 2017 and N286.30 billion in 2018.

Data also showed that the Nigeria Customs Service (NCS) collected a total of N853.91 billion as VAT within the four-year period under consideration.

In 2015, the NCS collected a total of N169.92 billion as VAT, and this value rose to N177.86 billion in 2016 and N202 billion in 2017.

The value of VAT collected by NCS peaked in 2018 at N304.13 billion, being the highest recorded under Buhari’s first tenure as president.

The Minister of Budget and National Planning, Senator Udoma Udo Udoma, has also confirmed moves to hike the VAT.

“There may be some changes in VAT and other things. But we will be coming to you in order to make sure that we can fund the minimum wage,” Senator Udoma told the Senate Committee on Finance on the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP).

However, the Abuja Chamber of Commerce and Industry (ACCI) and the Civil Society Legislative Advocacy Centre (CISLAC) have separately advised against the planned hike in VAT rate.

An economist, Dr. Chijioke Ekechukwu, advised the FIRS to expand the VAT collection net further to accommodate evaders instead of hiking the rate.

“They need to be more efficient in the collection. Many Nigerians with varying high income or savings are not paying quantum merit taxes. They pay far less than their income,” he said.

Dear Esteemed reader,

As part of our drive to keep improving the content of our newspaper, we are conducting a readership survey to enable us serve you better.

Kindly take two minutes of your time to fill in this questionnaire.

Thank you for your time. Click here to begin

Download Daily Trust News App

Get it on Google Play
Share this article

BREAKTHROUGH NATURAL CURE FOR PROSTATE ISSUES IN JUST 15 DAYS!!!

You Can Prevent PROSTATE CANCER!!!

Your PROSTATE ENLARGEMENT Is REVERSIBLE!!!

Don't Let It Threaten You!

To SHRINK And NORMALIZE Your PROSTATE Within 15 Days Without Surgery Or Chemical Drugs, Click Here!!!

Join us on


Share your story with us: 08189301900 (Whatsapp and SMS only) Email: dtonline@dailytrust.com

Complain about a story or Report an error and/or correction: +2348189301900

DISCLAIMER: Comments on this thread are that of the maker and they do not necessarily reflect the organizations stand or views on issues.