Cost of Goods Set To Rise Again, As Governors Want Buhari To Increase VAT to 20 percent

Nigerian governors have urged the Federal Government to increase the Value Added Tax (VAT) to 15 percent, and remove petrol subsidy in order to raise the government’s revenue, and reduce expenditure.

The governors want VAT increased from the current 7.5 percent to 10 percent, before stepping it up to 15 percent, then raise it to 20 percent, two years after the Federal Government raised the value added tax from 5 percent in 2020.

This will further increase the cost of goods and services in the country that is already struggling with soaring inflation that has reduced consumer spending amid rising cost of living.

President Muhammadu Buhari heard the suggestions last month during a meeting with the governors, where they asked that VAT should be re-introduced into the exclusive list.

He was told to eliminate state-level profit income tax (PIT), but introduce three percent federal income tax. Also, they urged Buhari to introduce state sales taxes of 10 percent across the 36 states and FCT.

Part of their request, according to Premium Times, is that the government revisit the decision to drop the subsidy after postponing the removal for 18 months. The government had planned to remove it in January.

Buhari was also advised by the governors to eliminate NNPC-funded projects. It was gathered that the suggestion was made to enable the government have enough funds to make a one-off retirement package to public workers above 50 years.

Other demands made are reduction of empowerment programmes, personnel costs of Ministers, Departments, and Agencies (MDAs), as well as pause MDAs, FIRS, NPA, NIMASA and NCC foreign trips. They also wanted federal government officials and their families to have limited access to visa approval, unless granted by the presidency.

This is expected to increase availability of foreign exchange, which will grow Nigeria’s reserves, at a time the excess crude account fell to $376,655 from $35.37 million.

They told the president to ensure the hasten sell off of Niger Delta Power Holding Company (NDPHC) power plants, which is non-performing assets.