The Federal Executive Council (FEC) presided over by President Muhammadu Buhari has approved a two point five per cent increase in the Value Added Tax (VAT).
Briefing State House correspondents at the end of the maiden FEC meeting in Abuja, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said implementation of the VAT increase would not commence until the National Assembly amends the Value Added Tax Act.
“Council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed an increase of VAT rate from five percent to 7.2 per cent.
“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT Act. So, it is not going to be implemented immediately until the Act is reviewed,” she said.
The minister told journalists that the council also approved N10.07 trillion budget estimates for the 2020 fiscal year and the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
“The expenditure for the year 2020 is in the total sum of N10.07 trillion. This is three per cent less than the approved expenditure in the 2019 budget that has been passed into law. The total expenditure includes statutory transfers, non-debt recurrent expenditure such as salaries and pensions and also the social intervention Programme.
“The 2020 budget has a debt service estimated at N2.45 trillion and a sinking fund to retire maturing obligations issued to local contractors and other creditors in the sum of N296 billion. So there is a total sum of N3.43 trillion that is provided for personnel and pension cost inclusive of N218 billion for the top 19 government owned enterprises in the country. This represents an increase of N453 billion over the 2019 approved budgetary expenditure. This also implies a 40 percent of this recurrent expenditure to the projected revenue.”
FEC also approved N182. 68 billion for various road projects across the country.
Minister of State for Works and Housing, Mr Abubakar D. Aliyu, who disclosed this, said the road projects are in Lagos, Niger, Kano, Katsina, Edo, Kwara, Taraba, Jigawa, Imo, Abia, Yobe and Anambra states and the Federal Capital Territory (FCT).
Also speaking, Minister of Transportation, Mr Rotimi Amaechi, said the council approved revised estimates for the rehabilitation of Itakpe/Ajaokuta Rail line.
“The contract was awarded $122 million but we requested for a total of $56 million additional works which were broken down into $38.8 million additional works and $17.2 million variation now bringing the contract of Itakpe to Warri to a total of $178.7 million,” he said