The Arewa Consultative Forum (ACF) has warned that increasing Value Added Tax (VAT) is not justifiable at a time when Nigerians are bearing the brunt of daunting economic challenges occasioned by President Bola Tinubu’s reforms.
The Northern socio-cultural organisation and the Centre for the Promotion of Shariah (CPS) revealed this on Thursday at the Public Hearing on Tax Reform Bills organised by the House of Representatives Committee on Finance at the National Assembly Complex Abuja.
Represented by a former Minister of State for Finance, Dr Yerima Ngama, the ACF rejected the proposed VAT increase, inheritance law, scrap of TETFund, NASENI and NITDA, among others.
He said increasing VAT would amount “to punishing those paying VAT. The federal government should expand the tax net, not increase the tax.”
He said that even if taxes are increased, the federal government agencies cannot collect them. The ACF chieftain said, “We should be talking about improving our capacity to collect the collectable tax, but not increase it. What is increasing the tax when you cannot collect up to 30 per cent of it?”
The ACF recommends retaining the current 7.5 per cent VAT rate, citing economic challenges for citizens and businesses.
He said ACF recognises that the government needs to increase revenue, “but we also believe that the current VAT rate already significantly burdens citizens and businesses.
“Increasing the rate further could have unintended consequences, such as reducing consumer spending and harming economic growth,” Ngama said.
Regarding VAT distribution, Dr Ngama said the formula could be reached through political consensus but not necessarily through a law. “It is not everything that must be put in a law. The issue of VAT distribution can be determined politically — through a consensus between the federal, state and local governments,” he said.
The pan-Arewa organisation also recommends significantly reducing the powers attributed to the Chief Executive Officer and Chairman of the Board of Directors/Governance of the Joint Revenue Board.
Sr Ngama said the proposed legislation centralises excessive supervisory and accountability powers in a single individual.
“The National Revenue Service chairman is too powerful. We know he is hardworking, but his workload is too much. He appoints the coordinating directors; he chairs the board of NRS; that is too much for him.”
He recommends that the president appoint the coordinating directors as executive directors subject to the approval of the Senate.
The ACF report also recommends amending Section 69 of the proposed Nigeria Tax Bill to retain TETFUND and NITDA because they play critical roles in promoting education and technological development in Nigeria, and their retention is essential for the nation’s continued progress.
On inheritance law, ACF said the National Assembly should expunge the section entirely and “allow states and local governments to determine that.”
He commended President Tinubu for creating the livestock ministry, saying, “The livestock minister should be given a target of establishing 40 world-class ranches across the country before 2027.”
In its presentation, the Centre for Promotion of Shariah, represented by Professor Kabiru Dandago, an accounting and taxation expert from Bayero University Kano, said the ‘supremacy clause” in Section 202 of the Nigeria Tax Bill (NTB), which grants the bill supremacy over all other laws related to tax administration, assessment, collection, accounting and enforcement.
Professor Dandago said, “To address this issue, the Centre strongly recommends that Section 202 be
expunged or amended to ensure the NTB’s alignment with Nigeria’s constitutional framework.”
CPS also recommends amending Section 190 of the NTB to retain all VAT-exempted items listed in the Finance Act (2020).
On the issue of visualisation, the centre suggests that all problems related to visualisation, such as Section 23(1), Section 69(1-2) and Section 99, be deleted from the NTAB until the country is ready to implement them.
The National Assembly is considering four proposed legislations: the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, the Joint Revenue Board Bill, and the Nigeria Tax Bill.
The two chambers of the National Assembly have passed for a second reading the four proposed legislations.
