NLC, NECA reject VAT hike, says move is insensitive

The Nigeria Labour Congress (NLC) and the Nigeria Employers Consultative Association (NECA) on Thursday rejected plans by the government to increase Value Added Tax (VAT) from 5 to 7.2 percent.

Speaking with our correspondent in Abuja, General Secretary of the Congress, Comrade Emmanuel Ugboaja said such move is insensitive and is capable of eroding the new minimum wage.

Comrade Ugboaja however urged the government to rather widen the tax net by getting more people to pay tax.

“We reject the increase as it clearly seeks to erode whatever purchasing power the minimum wage may bring .

“We see it as a move not well thought through with the welfare of Nigeria wage earners in mind. It’s impact on Nigeria manufacturers and job creation and retention will be nightmarish.

“It is clearly insensitive to the plight of the ordinary Nigerian. What the government needs to do is to widen the tax net and get people to pay tax and not to over tax those that are in the net as of now”.

The Nigeria Employers’ Consultative Association (NECA), on her part cautioned against the timing of the VAT increment.

The Director General of NECA, Timothy Olawale, stated that “ recently released data of the country’s GDP growth indicated a contraction in the past 2 quarters (Q4, 2018 (2.38%), Q1, 2019 (2.10%), Q2, 2019 (1.94%)) and also International Monetary Fund has recently revised downward its global economic growth forecast to 3.2% due to sluggish in global economy.

According to him, this suggests that at such period of time, economies should be formulating fiscal measures/policies to stimulate their economies.

He further stated that “the benefits of the recently signed National Minimum Wage of N30,000 would be neutralized by the proposed increase in the VAT, further reduce the purchasing power of the citizens, leading to increase in prices of goods and services, resulting in upward movement of the inflation rate, and further contraction of the economy”.

On businesses, he lamented that since the purchasing power of the citizens would have been reduced, sales of goods and services will reduce and inventories for business will be high and could lead to closure of businesses that ought to be supported by government in reducing unemployment rate that is currently alarming,

Mr. Olawale also opined that in the event that Government must increase VAT against the will of the people, it should have been limited to luxury or ostentatious goods only.

He also urged government to double its efforts at expanding the tax net, reduce the income gap and improve the economy through more friendly fiscal policies and promote the ease of doing business in Nigeria.

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