Nigerians yesterday, described the new finance law as an attempt by the Federal Government to further impoverish the citizenry.
In separate interviews with Daily Sun, a cross section of Nigerians noted that the move would hurt the economy rather than improving it, while urging the Federal Government to look for other ways to grow the economy rather than causing untold hardship.
For instance, the National President, Progressive Association of Nigeria (PSAN), Boniface Okezie, noted that the signed finance bill is an act of unnecessary burden on Nigerians which contradicts the promise of change the current administration had promised.
“The way this present administration is looking for money amounts to double taxation on Nigerians and this will only increase the level of poverty. We are talking about creating a business friendly environment but we are indirectly chasing away these foreigners who are worried about how much profit they make. For me, the government should look for a way to grow the economy because this will have adverse effect on the economy which is wobbling at the moment.”
On his part, the Managing Director, APT Securities, Mallam Kurfi Garba, noted that Nigerians might shy away from paying taxes following the increase.
“For me, these are the necessary major steps taken to increase revenue because there is need to improve revenue otherwise the Federal Government will continue spending more on debt servicing and that is not the best. If you go into borrowing, you look at whether your revenue will increase through production or the revenue increases through tax.”
In its reaction, the Nigeria Employers’ Consultative Association (NECA), said the common man will be at the receiving end of the increase in VAT.
Its Director General, Timothy Olawale, also cautioned the government not to see the private sector as a “cash cow” in its drive to raise revenue.
According to him, such a move will do more harm to the already burdened private sector and further impoverish citizens that the President promised to take out of poverty.
“Even if businesses are taxed more through illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb,” he said.
While proposing a way out for Nigeria, Olawale noted that what to be done by the government is an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as it’s being posited, arguing that less than 40 per cent of Nigerians are tax compliant.
Commenting on the development, a former Chairman of Ikeja branch of the Chartered Institute of Taxation (CITN), Mr. Olushola Agbeluyi, said the review of stamp duty charges for deposit money transactions remained a welcome development.
Prior to the new law, all deposit banks and financial institutions are required to charge stamp duties of N50 on every eligible transaction above NGN 1,000. There are exemptions for transactions between accounts held by the same bank customer and for salary accounts.
However, Agbeluyi said the new law will now be N50 payment on every eligible transactions above N10,000, leaving more money in the hands of people for further transactions.
The tax practitioner added that the number of transactions that will qualify for the payment will reduce.
While welcoming the new law as a step in the right direction, Agbeluyi advised that the entire Stamp Duty Act is obsolete and should be reviewed in order for it to meet the demands of the present day economic standards.
Meanwhile, members of the organised labour have vowed to resist the implementation of the new finance law.
This was even as the Organised Private Sector (OPS)warned that the Federal Government’s action would cripple businesses in the country.
President of Trade Union Congress (TUC), Quadri Olaleye, in a telephone chat, said the trade congress was still consistent with its warning earlier sent out when the National Assembly passed the bill late last year. “We will resist it. We have warned that we would resist any means to overburden workers with taxes and we considered this to be so,” he said.
He stated that the leadership of the Congress would meet very soon to decide on the action that the centre would take in response to the President’s signing the bill into law.
For its part, the Nigeria Labour Congress (NLC) also warned that it would not accept the implementation of the law on Nigerian workers.
The Vice President of the NLC, who is also the President of the Nigeria Civil Service Union (NCSU), Lawrence Amaechi, said that the new Finance Law would wipe out the gains of the N30,000 minimum wage paid by the Federal Government in December.
“My simple reaction to this is that government gave us the minimum wage with its right hand and collected same with its left hand.”
He warned that organised labour is battle ready should the increase in any way impact negatively on the workers.
LCCI, has however, called for caution, noting that the VAT increase will impact adversely on businesses from cost pressures perspective.
Its Director General, Musa Yusuf, warned that margins would be affected, depending on the extent to which additional costs could be passed to consumers.
“The worry is that we are operating in a high cost environment. We also have the worry about the provision on minimum tax.
“We had argued against this provision. It is inappropriate to compel loss-making firms to pay tax, no matter how little. This amounts to erosion of capital.”
Though he pointed out that there are a number of favourable provisions for small businesses, he said it is an aspect to commend.
The LCCI boss said the impact will also be positive on government revenue, especially for states and local governments.
“Their fiscal position will be enhanced. States and local governments are the major beneficiaries of VAT,” he maintained.
President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Ndukaku Ohaeri, has advised government to address the issue of multiple taxation which has become a threat to the growth of business enterprise across the country as it embarks on major finance reforms,
“The government cannot be more interested in collecting taxes than creating enabling environment for businesses to thrive. Nigeria’s current ranking as 131st from 146th in the World Bank Ease of Doing Business Index remains a concern. Thus the issue of multiple taxation by the federal, state and local government require urgent attention.
“We need to move beyond the rhetoric of failed attempts to harmonizing tax laws as it concerns business ventures in Nigeria.”
Former President, Chartered Institute of Bankers of Nigeria (CIBN), Professor Segun Ajibola, the signing of the finance bill into law will help government generate revenue.
Through the increase, he said the government would have more revenue which would be shared among the three tiers of government; federal, state and local government levels and this will put them in a better position to perform with higher revenue, adding that, this is also expected to reduce the budget deficit as the government will have more resources to implement the budget.
However, he said, this move will add more to the living cost of Nigerians as it will increase the cost of basic necessities such as food, clothing and other day to day requirements will be on the increase.
Also speaking, former Chairman of the Presidential Committee on the Nigeria Customs Reforms, Lucky Amiwero, said the VAT hike would affect the fortunes of businesses.
He said while the government of Ghana is reducing taxes for economic development, Nigeria is increasing its own, which, he said, is not going to be in the interest of the country as whole.
Editor-in-Chief, AgroNigeria, Richard-Mark Mbaram, said the signing into law of the Finance Bill will lead to increase in VAT and the impact on the common man is not going to augur well.
“It would be detrimental to businesses because companies are going to pass on the cost to consumers. But remember that there are also cushioning measures that have been put in place in the budget regarding the common man.”
For his part, Dr. Wasiu Awoyale, a post-harvest and cassava value chain expert, stated that the bill is going to have a negative impact on the agric sector.