OrderPaperToday– The assent to the Finance Bill by President Muhammadu Buhari on Monday has been greeted with outcry and criticisms.
This is as a result of concerns that there will be a hike in prices of food and commodities following the increment of the Value Added Tax (VAT) in the bill.
The Finance Bill contains seven other amendment bills.
These are: Petroleum Profit Tax Act (PPT), Customs and Excise Tax Act, Company Income Tax Act (CITA), Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act and the Capital Gains Act.
While major highlights are infused in other bills, the increment to the VAT rate from five to 7.5.% has been of major concern to Nigerians which topped Twitter trends for over four hours on Tuesday.
It is,however, worthy to note that certain items and commodities were exempted from the increment as indicated by President Muhammadu Buhari when he presented the Finance Bill alongside the 2020 Appropriation Bill to the National Assembly on October 8, 2019.
In Buhari’s speech, he said the VAT rate increase exempts pharmaceuticals, educational items, and basic commodities of which the scope will keep expanding.
These said items are brown and white bread; cereals including maize, rice, wheat, millet, barley and sorghum; fish of all kinds; flour and starch meals; fruits, nuts, pulses and vegetables of various kinds; roots such as yam, cocoyam, sweet and Irish potatoes.
Others include: Meat and poultry products including eggs; milk; salt and herbs of various kinds; natural water and table water.
Meanwhile, the Nigerian president informed in his speech, that small and medium enterprises will not be affected because of the raise of the threshold for VAT registration to N25 million in turnover per annum, “such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for our Micro, Small and Medium-sized businesses”, he stated.
According to him, the additional revenue obtained from this increment will be used “to fund health, education and infrastructure programmes. As the States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well.”
He said the importance is to “intensify our revenue generation efforts. That said, this Administration remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms.”