The Federal Government’s plan to increase Value Added Tax (VAT) to more than five per cent has been faulted by a tax expert.
A former president of Chartered Institute of Taxation of Nigeria (CITN) and Managing Partner, Saffron Professional Services, Mrs Adebimpe Balogun, on Wednesday said the present economic situation in the country does not support such irrational development.
Balogun who spoke at the eighth Wole Soyinka Centre Media Lecture Series, themed: “Tax Education, National Development and the Seminal Role of the Media”, said that rather than increase taxes payable by Nigerians, government at all levels should broaden their tax base by bringing more people in the formal and informal sectors into the tax net.
Speaking on ‘Falling Crude Prices: How can effective taxes help limit the hardship’ , Balogun, who was the first female president of CITN charged the state governments to look inward and develop other products that could generate additional internally generated revenue that would help them cope well with the economic recession rather than depend solely on the monthly federal allocations.
She further called on the law makers and other highly placed government officials who earn heavy salaries to lead by example by paying taxes commensurate to what they earn.
“Anybody that is thinking of increasing the VAT rate, is a suicidal attempt for our economy. Right now, people are suffering over the inability to pay for many tax required fees, ranging from the schools, rents, etc.
“This is not the time to start asking tax payers for higher rate. But rather it is the time to expand the tax base and the tax net, to capture those who are not in the tax net at the moment. We have a misconception about who are the informal sector stakeholders. The informal sector are not just the traders, or the ‘Balogun, Ojo market traders’, but rather those who do portfolio contracts and collect the juicy contracts from the government and are not charged adequately.
“The question I have for the Federal Inland Revenue Services, FIRS, is; to what extent are they using our withholding tax system to capture these people? This is because the federal government agencies that give out these contracts are obliged to withhold taxes. And so, how much of that do we leverage to be able to attract taxes from those informal sectors and not collecting much taxes from employees, though I am not saying that employees should not be taxed.”