Implications Of FGN’s Increase Of VAT Rate To Pay For The New Minimum Wage.

The Minister for Budget and National Planning, Udoma Udo Udoma and the Executive Chairman of the FIRS, Babatunde Fowler hinted during an interactive session with the National Assembly on Tuesday 19 March 2019 that VAT rate is likely to go up to enable government fund the new minimum wage of N30,000 per month approved by the National Assembly.

FIRS subsequently clarified that the intention is to increase compliance rate and not tax rates but says Nigerians should be ready for a VAT rate increase by the end of 2019. Potentially this means an increase of about 50% will raise the current standard VAT rate of 5% to 7.5%.

The question is, should government increase VAT rate?

To put things in perspective, the average VAT collection in the past 6 years is about N900 billion. The revenue is shared 15% to the Federal Government, 50% to States and 35% to LGs net of 4% cost of collection to FIRS.

If the rate is increased by 50% (all things being equal) we will generate on average an additional N450 billion annually. Less 4% cost of collection to FIRS, all 36 states will get 18 billion per month translating to an average of N500 million per state. Since Lagos, FCT, Rivers, Kano and Kaduna generate 87% of VAT revenue, they also share a big chunk of VAT revenue, meaning that the financially disadvantaged states will get much less than N500 million monthly.

Unfortunately all things are never equal especially when it comes to tax. An increase in VAT rate will inevitably impact on consumption and VAT compliance. The combined effect will reduce the expected revenue.

“Contemplating an increase in VAT rate now is bad timing and inconsistent with current economic reality. VAT increase will lead to higher inflation, interest rate hike, more unemployment and generally make people poorer. Any increase in VAT rate without a registration threshold and zero rating of basic consumption will increase burden on the poor and SMEs contrary to the 2017 National Tax Policy. Trying to expand the VAT net while also increasing VAT rate at the same time is a faulty tax strategy. Nigeria can make twice as much from VAT at current rate by reforming the law, expanding the net and ensuring robust administration rather than by increasing rate.” – Taiwo Oyedele

Beyond the revenue impact, there will be other unintended consequences including:

higher inflation, interest rate hike, more unemployment and people will generally become poorer.
without a VAT registration threshold and zero rating of basic consumption it will increase the burden on the poor and SMEs contrary to the 2017 National Tax Policy.
seeking to expand the VAT net while also increasing VAT rate at the same time is a conflicting strategy.

Rather than the seemingly easy way out of raising rates, what can Nigeria do?

Nigeria can make twice as much from VAT at current rate by reforming the law, expanding the net and ensuring a robust administration rather than by increasing rate. This should include a review of VAT waivers, better policing of the border to improve import VAT collection, framework for VAT on imported services and digital economy.

Contemplating an increase in VAT rate now is bad timing and inconsistent with current economic reality. In any case the likely increase in revenue will not be sufficient to pay the new minimum wage.

Facebook Comments

451 thoughts on “Implications Of FGN’s Increase Of VAT Rate To Pay For The New Minimum Wage.

  1. Pingback: MILF
  2. Pingback: اغاني
  3. Pingback:
  4. Pingback: Royal CBD
  5. Pingback: RoyalCBD
  6. Pingback: connecticut cbd
  7. Pingback: cbd florida
  8. Pingback: iowa
  9. Pingback:
  10. Pingback: Royal CBD
  11. Pingback:
  12. Pingback: oregon cbd
  13. Pingback: Royal CBD
  14. Pingback: oklahoma cbd
  15. Pingback:
  16. Pingback: Royal CBD
  17. Pingback: RoyalCBD
  18. Pingback: Royal CBD
  19. Pingback: 5euros
  20. Pingback: حلوه
  21. Pingback: الخيانة
  22. Pingback: ثقة
  23. Pingback: غرور
  24. Pingback: Workshop
  25. Pingback: Sonia Randhawa
  26. Pingback: Sonia Randhawa
  27. Pingback: maeng da kratom
  28. Pingback: IT jobs
  29. Pingback: watermelon vape
  30. Pingback: best CBD oil
  31. Pingback: CBD products
  32. Pingback: best CBD oils
  33. Pingback: backlink
  34. Pingback: apps for pc
  35. Pingback: best CBD gummies
  36. Pingback: best CBD oil
  37. Pingback: best CBD oil
  38. Pingback: best CBD gummies
  39. Pingback: best CBD gummies
  40. Pingback: best CBD oil
  41. Pingback: CBD oil near me
  42. Pingback: best CBD oil
  43. Pingback: buy CBD oil
  44. Pingback: best CBD gummies
  45. Pingback: best CBD gummies
  46. Pingback: buy ativan online
  47. Pingback: Consultant SEO
  48. Pingback: Dank vapes carts
  49. Pingback: strapless strap on
  50. Pingback: Parrots for sale
  51. Pingback: CBD products
  52. Pingback: dank vapes
  53. Pingback: extender sleeve
  54. Pingback: pegging dildo
  55. Pingback: CBD gummies
  56. Pingback: best CBD pills
  57. Pingback: CBD capsules
  58. Pingback: pocket stroker
  59. Pingback: quarantine
  60. Pingback: buy CBD oil
  61. Pingback: CBD salve
  62. Pingback: Royal CBD topical
  63. Pingback: Royal CBD oil
  64. Pingback: best Royal CBD oil
  65. Pingback: Research
  66. Pingback: sex drug
  67. Pingback: best CBD oil
  68. Pingback: Rick simpson oil
  69. Pingback: rabbit vibe
  70. Pingback: Facebook
  71. Pingback: Buy Weed Online
  72. Pingback: CBS oil benefits
  73. Pingback: GST Return Filing
  74. Pingback: cannabis culture
  75. Pingback: erkek parfüm
  76. Pingback: CBD roll on
  77. Pingback: CBD pills
  78. Pingback: CBD products
  79. Pingback: Marijuana Wax
  80. Pingback: Best Weed Strains
  81. Pingback: Speelgoed Zoeken
  82. Pingback: self mastubator
  83. Pingback: nill
  84. Pingback: app for pc
  85. Pingback: juul mango pods
  86. Pingback: Exotic carts
  87. Pingback: best cbd
  88. Pingback: royal cbd products
  89. Pingback: royalcbd
  90. Pingback: cbd for sale
  91. Pingback: best cbd
  92. Pingback: CBD for sale
  93. Pingback: CBD oil
  94. Pingback: buy CBD oil
  95. Pingback: CBD for sale
  96. Pingback: buy CBD oil
  97. Pingback: CBD for sale
  98. Pingback: how to use strapon
  99. Pingback: CBD
  100. Pingback: CBD
  101. Pingback: CBD
  102. Pingback: CBD
  103. Pingback: CBD
  104. Pingback: CBD
  105. Pingback: CBD
  106. Pingback: CBD
  107. Pingback: Dank cartridges
  108. Pingback: Dank vapes
  109. Pingback: clitoral vibrator
  110. Pingback: Dank carts
  111. Pingback: English bulldog
  112. Pingback: THC vape juice
  113. Pingback: Pets store
  114. Pingback: THC vape oil
  115. Pingback: Cool Apps
  116. Pingback: how to use a dildo
  117. Pingback: VR Porn Games
  118. Pingback: coinchomp
  119. Pingback: Vape Store Near me
  120. Pingback: sex
  121. Pingback: nude live
  122. Pingback: sexy live cams
  123. Pingback: pl/sql diagram
  124. Pingback: dax history
  125. Pingback: Burket Indiana
  126. Pingback: thrusting
  127. Pingback: vibrating panties
  128. Pingback: domain authority
  129. Pingback: royal cbd
  130. Pingback: MyInforms
  131. Pingback: flight
  132. Pingback: long black dong
  133. Pingback: webehigh
  134. Pingback: room tour
  135. Pingback: CBD gummies
  136. Pingback: how to make dildo
  137. Pingback: stress management
  138. Pingback: tulpentour
  139. Pingback: protrusion splint
  140. Pingback: Design logo
  141. Pingback: Medical Marijuana
  142. Pingback: hasta karyolası
  143. Pingback: weed store usa
  144. Pingback: pornographie
  145. Pingback: assessment quiz
  146. Pingback: pet life today
  147. Pingback: CBD oil U.K.
  148. Pingback: visa for india
  149. Pingback: get a gadget
  150. Pingback: Cheapest smm panel
  151. Pingback: realistic dildo
  152. Pingback: SEO
  153. Pingback: menards employee
  154. Pingback: cbd oil
  155. Pingback: buy cbd
  156. Pingback: buy cbd gummies
  157. Pingback: Pound of Weed
  158. Pingback: viagra
  159. Pingback: pakistani fashion
  160. Pingback: mlifeinsider
  161. Pingback: Bandar Poker
  162. Pingback: Dank Vapes
  163. Pingback: cbd
  164. Pingback: 4chan porn
  165. Pingback: "buy ephedra"
  166. Pingback: carpet muncher
  167. Pingback: 8 inch dong
  168. Pingback: cbd oil for sale
  169. Pingback: sex toy collection
  170. Pingback: WAEC Time Table
  171. Pingback: debt tips
  172. Pingback: Mitarbeiterumzug
  173. Pingback: ogads ghandi
  174. Pingback: netprobk
  175. Pingback: prepaidgiftbalance
  176. Pingback: Seks Sohbet
  177. Pingback: Xanax for sale
  178. Pingback: best male stroker
  179. Pingback: Google
  180. Pingback: realistic dong
  181. Pingback: 더킹카지노
  182. Pingback: 우리카지노
  183. Pingback: bangbros
  184. Pingback: 예스카지노
  185. Pingback: terjemahan
  186. Pingback: mobile dog trainer
  187. Pingback: Naijaloaded
  188. Pingback: top sex slings
  189. Pingback: cock ring
  190. Pingback: biography wiki
  191. Pingback: cbd oil for sleep
  192. Pingback: VIAGRA
  193. Pingback: warming rabbit
  194. Pingback: bank / bankowa
  195. Pingback: big dildo
  196. Pingback: 코인카지노
  197. Pingback: Buy pbn links
  198. Pingback: wall pa per
  199. Pingback: 123movies
  200. Pingback: Seed Company
  201. Pingback: 메이저사이트
  202. Pingback: extended stay
  203. Pingback: descargasmix
  204. Pingback: roblox promo codes
  205. Pingback: Mesothelioma
  206. Pingback: menu with price
  207. Pingback: anal sex toy
  208. Pingback: Cenforce 150mg
  209. Pingback: sex videos
  210. Pingback: wand massager
  211. Pingback: Infrared Cabin
  212. Pingback: 먹튀사이트
  213. Pingback: skelaxin
  214. Pingback: 손오공
  215. Pingback: 우리카지노
  216. Pingback: 먹튀사이트
  217. Pingback: vibrator
  218. Pingback: male vacuum pump
  219. Pingback: cbd pills
  220. Pingback: 토토메이저
  221. Pingback: viagra men
  222. Pingback: 7 bitcoin
  223. Pingback: 먹튀검증업체
  224. Pingback: x-rated
  225. Pingback: kinky
  226. Pingback: cheeky panties
  227. Pingback: tch # HUSTLE
  228. Pingback: anal toys
  229. Pingback: get free robux
  230. Pingback: how 2 hack v bucks
  231. Pingback: apps for pc
  232. Pingback: viagra
  233. Pingback: viagra
  234. Pingback: viagra
  235. Pingback: viagra
  236. Pingback: bondage sex kit
  237. Pingback: best smm panel
  238. Pingback: viagra
  239. Pingback: cbd for sale
  240. Pingback: buy cbd oil
  241. Pingback: Google
  242. I simply couldn’t go away your website before suggesting that I really enjoyed
    the usual info a person supply for your guests? Is gonna be back ceaselessly in order to check up on new

  243. Greetings I am so delighted I found your weblog, I
    really found you by error, while I was searching on Google for something else, Regardless I
    am here now and would just like to say many thanks for a incredible
    post and a all round enjoyable blog (I also love the theme/design), I don’t have time to browse it
    all at the minute but I have saved it and also included your
    RSS feeds, so when I have time I will be back to read a lot more, Please
    do keep up the awesome work.

Leave a Reply

Your email address will not be published. Required fields are marked *