A financial expert and ex-banker, Mr Aniche Ndudi Rowland, has advised President Bola Tinubu to be cautious in the new tax bill which is before the National Assembly.
Mr Anichie said Nigerians are yet to overcome the fuel subsidy removal, adding that any policy or law to increase taxation would worsen the standard of living of a majority of Nigerians.
He said the outcry of Senator Ali Ndume, representing Borno South in the Senate,was because the proposed tax regime might not favour some states. He also said Lagos State where President Tinubu hails from would benefit more, considering its strategic location.
He said, “Lagos State is the highest revenue generator of Value Added Tax. There is a mindset to make Lagos benefit more. That is why the cries are coming from the North.
“Nigerians are going through hard times. VAT has its own inflationary impacts on the citizens. Any additional form of tax will make most Nigerians suffer. That is the worry of Ali Ndume.
“VAT increase from seven to 10 percent will be suffered by the final consumers. Banks are not creating loans because the interest rate is very high. Whenever Labour kicks for wage increase, FG will come with VAT or fuel pump price increase.”
He said the opposition to the new tax regime was because of the undisciplined expenditure patterns of the executive arm of the government.
Quoting him, “People are apprehensive because our leaders embark on frivolous spending. The president bought private jets, built a yacht, and repaired the vice president’s lodge at a time Nigerians are unable to adjust to the fuel subsidy removal due to high inflation.
“The lifestyle of the executives is not encouraging. I supported the removal of the fuel subsidy, but it has not changed the lifestyle of our leaders. You told us to endure the pains, and you are bringing in more taxes to cause more pains.”
He advised Tinubu to first expand the country’s productive base, “which is the energy sector, not taxation”.
According to him, “We still hear stories of the national grid collapsing and our refineries going into voice mails. Let us suspend VAT issues.
“Also, raising company income taxes from 15% to 27% may force many to leave. Ghana has become their destination. We should reduce income tax for more companies to come in.”
Also speaking, an economist, Prof Chinweike Uba, said the cause of the apprehension is about the distribution.
According to him, “The North is crying because of the distribution structure. For instance, revenue on alcohol should not go to any region that abhors it. I don’t believe that we need to have a flat VAT rate. Various companies evade tax. I suggest having different VAT rates for different products. Luxury products should have a higher VAT rate.
“Inflation will increase, but goods that are consumed less should have less VAT rates. Energy cost, food shortage and corruption are increasing our inflation.”
He however said the new tax administration might address some of the issues relating to multiple taxation.
Quoting him, “It is to streamline various taxes by the states and FG. State governors may withdraw because of the fear of the federal government taking over tax collections centrally.
“It will reduce tax burden on low income earners and transfer it to high income earners.
“It has its advantages and disadvantages. But jerking VAT from seven to 15% is not a good approach. There should be different VAT rates on different products.”