Kehinde Fajobi
The Trade Union Congress (TUC) of Nigeria has strongly opposed the proposed increase in the Value Added Tax (VAT) rate, outlined in the Federal Government’s Tax Reform Bills, warning that the move could worsen the economic hardship already faced by Nigerians.
The Federal Government had proposed a phased VAT increase from the current 7.5% to 10%, 12.5%, and ultimately 15%.
The TUC described the plan as ill-timed, further exacerbating the financial strain on citizens already dealing with inflation, unemployment, and rising living costs.
Speaking at a press briefing in Abuja on Tuesday, following the TUC’s National Executive Council meeting on November 26, 2024, TUC President Festus Osifo argued that maintaining the VAT rate at 7.5% was essential to protect Nigerians from additional financial burdens.
“Allowing the Value Added Tax rate to remain at 7.5 per cent is in the best interest of the nation. Increasing it now would impose an additional burden on households and businesses already struggling with economic challenges,” Osifo said.
He continued, “With inflation, unemployment, and the cost of living on the rise, higher taxes could stifle economic growth and erode consumer purchasing power.”
The TUC also called for a review of the tax exemption threshold, urging the government to raise it from ₦800,000 to ₦2.5 million per annum to ease the financial strain on low-income earners.
“This measure would increase disposable income, stimulate economic activity, and provide relief to struggling Nigerians,” Osifo explained.
“The threshold for tax exemptions should be increased to ₦2,500,000 per annum. This adjustment would offer much-needed relief to low-income earners, enabling them to cope with the current economic challenges.”
Additionally, the TUC expressed concerns over the proposed transfer of royalty collection from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to the Nigeria Revenue Service (NRS), warning that this could result in revenue losses and inefficiencies.
“Royalty determination and reconciliation require specialised technical expertise in oil and gas operations, which the NUPRC possesses but the NRS lacks.
“This shift could result in inaccurate assessments, enforcement challenges, and reduced investor confidence,” Osifo warned.
However, the TUC commended the government’s decision to retain the Tertiary Education Trust Fund and the National Agency for Science and Engineering Infrastructure, recognising their crucial role in enhancing education and technology in Nigeria.
“These institutions have significantly contributed to improving tertiary education and fostering homegrown technologies.
“Their continued existence is vital for sustained progress in education, technology, and national development,” Osifo said.
Osifo urged the Federal Government to adopt tax policies that prioritise citizens’ welfare and promote equitable economic growth.
“As discussions on the Tax Reform Bill continue, it is our hope that the focus will remain on fostering economic growth and improving living conditions for all Nigerians,” he added.
The TUC reaffirmed its commitment to advocating for policies that enhance the well-being of Nigerians, emphasising that proactive, citizen-centred reforms are a true reflection of leadership.