NECA, LCCI kick as Senate okays Buhari’s VAT hike – TheNigerialawyer

The Senate on Thursday passed the Finance Bill, 2019, despite
the public outcry  that greeted some aspects of the proposed
law particularly the increase in the Value Added Tax. From 5 per
cent to 7.5 per cent, Punch report.

Even in the  upper legislative chamber of the National
Assembly on Thursday, senators were divided over the increase in
VAT, as some of them insisted  that it would worsen poverty in
the country.

But in spite of dissenting voices, the Senate went ahead to pass
the bill,  including  the aspect that deals with VAT.

Groups, including the Nigeria Employers Consultative Association
, had faulted the planned increase in VAT. The Director General of
NECA, Mr. Timothy Olawale, had said it was not good for the real
sector.

In the Senate, some senators warned that the inclusion of the
VAT hike in the Finance Bill would worsen the suffering and pains
Nigerians are currently experiencing.

The bill seeks an amendment to Nigeria’s tax laws.The passage of
the bill was sequel to the consideration of the report of the
Senate Committee on Finance.

Other highlights

President Muhammadu had in October submitted  the bill with
the 2020 budget. Among others, the bill seeks amendments to 
Companies Income Tax Act; Value Added Tax Act; Customs and Excise
Tariff; Personal Income Tax; Capital Gains Tax Act; Stamp Duty Act,
and the Petroleum Profit Tax Act.

Explaining the bill, the Chairman of the Committee, Senator
Olamilekan Adeola, said it specifically sought to amend Nigeria’s
tax provisions.

He said the legislation would make the taxes  more
responsive to the policies of the Federal Government, among other
things. Adeola added that the amendment and passage of the Finance
Bill would enhance the implementation and effectiveness of
government’s tax policies.

He said the initiative to reform the tax system and the proposed
modifications to the fiscal rules around taxation were clearly
aimed at creating an enabling business environment. He said it
would  minimise the tax burden for Micro, Small and Medium
Enterprises.

According to Adeola,   the bill also introduced tax
incentives for investment in infrastructure and capital markets.He
added that the bill when signed into law by the President, would
support small businesses in line with the ongoing “Ease of Doing
Business Reforms” and raise revenues for the Government.

President of the Senate, Ahmad Lawan, said the bill would
streamline the tax system in Nigeria and enable the Federal
Government to get revenue for the provision of  services and
infrastructure to the citizens of this country.

He said, “What we have done is very significant because this is
to ensure we not only have credible and reliable sources of funding
for the 2020 budget, but also for subsequent activities of
government.

“The revenue generating agencies will have to sit up. The
National Assembly, particularly the Senate, will be mounting a lot
of oversight on the revenue generating agencies.

“If they have targets, we must ensure they meet these targets.
What we intend to do is to engage the revenue generating agencies
on a quarterly basis to evaluate their performance on revenue
generation, and to identify if there are challenges and how we can
achieve better outcomes.

“I believe what we have done is not to put tax burdens on the
ordinary people. What we have done is to create more revenues to
provide services and infrastructure for Nigerians, including the
ordinary people.This exercise was done in a bi-partisan manner, and
that is what we are known for,” Lawan said.

VAT hike inclusion in bill’ll increase
poverty – Senators

But Senator Gabriel Suswan, in his contribution, said the bill
to raise revenue for the Federal Government  would deliver
shocks to the people. He asked the Federal Government to provide
social safety net for the masses.

The Benue State senator said Nigerians would be taken by
surprise if the Senate went ahead with the amendment.

He advised the Federal Government to provide social programmes
that would soften the effect of the increase.

He said, “ I am concerned about the issue of VAT, some of the
amendments in the Value Added Tax no matter how you look at it is
going to affect all Nigerians. What I suggest is for the Federal
Government to create some social safety nets.

“The safety nets should  ameliorate the pains that the
people might go through as a result of the increase because it is
coming as a shock to the people and as their representatives we
have to speak on their behalf.

“Some of the amendments sought here are on the tax revenue and
to increase it, no matter how you see it here, this is something
that is going to affect all Nigerians.

“What I would have expected, I do not know whether that is in
the offing, is that the Federal Government should also in the same
vein create a social safety net that will ameliorate the pains
people are going to go through. This is a shock. People are not
used to it and it comes so sudden,”

Also, the Minority Leader, Enyinnaya Abaribe, disagreed with the
increase in  VAT. He said that Nigerians were already
suffering.

He said, “I can see that rate of Value Added Tax has been
changed. We feel that the rate of tax should be left as it is.
Nigerians are suffering too much already.”

Senator Abba Moro said there was no justification for an
increase in VAT. He said, “I understand that  the amendments
are due to lack of revenue, but the problem is not because we don’t
have the revenue but because our revenues are not being properly
managed.

“I don’t think there is any justification of an increase in VAT
from 5 per cent  to 7.5 per cent. We don’t create problems in
attempting to solve a problem, what we need is policy
implementation and proper management of our revenue.

Moro said the challenge with revenue in the country was poor
management and not the lack of it.

But Senator Ibikunle Amosun said it was time for tough decisions
that would improve the economy to be taken.

Amosun backs bill, says economy requires tough
decisions

He stated, “Governments are no magicians and you cannot give out
what you do not have.  Every day,  we complain about our
infrastructure. These are genuine complaints. If we do not have the
necessary revenue, we cannot get good roads and stable power
supply.”

The Deputy Senate Whip,  Orji Uzor Kalu, said, “The bill is
for the welfare of Nigerians. It will only affect luxury
goods.”

Leader of the Senate,Senator Abdullahi Yahaya, in his lead
remarks at plenary, faulted the increment  tax regime from 5
per cent to 7.5 per cent.

He argued that the Nigerian economy had suffered a serious
setback due to lack of revenue to fund the budget.

Abdullahi said the bill should be viewed as a revenue generating
tool for better economy than from partisan view.

He said, “The issue of the economy is an issue beyond politics.
Whether it is the APC today or the PDP tomorrow.  We have to
come out and think of how to improve it.The major problem of the
Nigerian economy is revenue. This is a N140tn  economy but
hardly raises N8tn of revenue from the economy.”

He said the lack of revenue had been a major reason government
in the past and present had challenges in providing  
infrastructure to support and sustain the economy.

He maintained that while he remained a member of the APC, it was
important to critically look at the amendments and make them serve
the interests of Nigerians.

Senator Ifeanyi Ubah said the public hearing did not have
representatives of major oil producers and petroleun marketers.

He said, “I need to draw your attention to  the amendment
to the Petroleum Proflt Tax Act, It will be so bad for Nigerians,
the industry is not growing, downstream and upstream.

“Looking at the PPT, it is going to add more pains to Nigerians,
I am of the opinion that it must be reviewed. I want to correct the
committee, there was no representation from the industry in this
public hearing.”

Ubah said the increment in the petroleum tax would increase the
pains of Nigerians, noting that the petroleum industry was not
developing.

He said, “Let us be reminded of the motive and agenda of the 9th
Senate which is to create a law that works for Nigeria. The
Petroleum Profit Tax Bill we can understand that petroleum is an
important aspect of our livelihood in Nigeria and 60 per cent of
our revenue in Nigeria is channelled towards importation of
petroleum products.

“The increase in the petroleum tax will be so bad for Nigerians
because the industry is not growing, 97 per cent  of petroleum
imports is being controlled by the NNPC.

“The increment will add more pains to Nigerians and I want it
reviewed , let me also note that there was no representative from
the oil industry that attended the open debate of the
committee.”

Besides criticism by some senators,  some civil rights
groups also berated  the Senate for approving VAT hike
from  5 per cent to 7.5 per cent.

The Executive Director, YIAGA Africa, Samson Itodo, in an
interview with one of our correspondents, said, “The gestation
period of the Bill passed by the National Assembly has become huge
source of concern. Two issues are worthy of interrogation.”

He asked, “What’s the extent of due diligence and depth of work
on the bill? What is the level of public participation in the bill
consideration?”

Ninth assembly has positioned itself against the
people – CSO

Also, a civic group, United Global Resolve for Peace, described
as anti-people, the financial bill and VAT increase by the
Senate.

The UGRFP Executive Director, Shalom Olaseni, said the ninth
assembly appeared to have positioned itself against the people by
its action.

He said, “The ninth  National Assembly seems to have
positioned itself to go against the ideals of constituency
representation in hurriedly passing those two bills which have been
publicly decried for being insensitive to the realities of ordinary
Nigerians.

“Who stands to benefit? Definitely not the people. The speed
with which the bills are enjoying passage simply because they are
executive bills goes to show that when our legislative priorities
are right, progress can be made.”

Senate failed to consider memoranda
submitted – NECA

On his part, NECA Director-General, Mr Timothy Olawale, said
that the passage of the Financial Bill would result in increase in
prices of goods and services.

Olawale, who described the action of the Senate as a rude shock,
as the Senators failed to consider memoranda submitted by Nigerians
on the bill before passing it.

He said, “It was a rude shock to the generality of Nigerians
that the ‘people’s Senate’ without due process of going through
memoranda submitted and that are still pouring in on the financial
bill passed the  bill to increase VAT , excise duty and stamp
duty. Nigerians by implication are now to pay more for goods and
services.

“Government, especially the National Assembly members, have
condemned the citizenry to a life of servitude to fuel their
appetite for easy life.

“The National Assembly is by implication asking Nigerians that
are already passing through tough times economically to prepare for
a more harrowing experience with eroded purchasing power in the
face of spiral rises in inflation.

Govt not pro-masses – NECA

“Unfortunately, government’s idea of wealth creation is not
pro-masses, adding to the burdens of the poor through more levies
and taxes.”

Olawale said the only succour left was for Nigerians to hope the
pro-people disposition of President Buhari would rise to the
defence of the people by declining assent to the bill.

He, however, lamented this might be a tall order as the Bill
emanated from the Presidency in the first instance.

Olawale said that besides the erosion of the masses purchasing
power, businesses were also going to be adversely impacted- the
shelf lives and inventories of goods would skyrocket, prices of
goods would increase and the burden passed to consumers.

VAT increase ‘ll hurt  citizens, economy, says
LCCI

The Lagos Chamber of Commerce and Industry  condemned the
increase in  VAT.

The Director-General, LCCI, Mr Muda Yusuf,  in an interview
with The PUNCH, said, “The upward review of  VAT at this time
will hurt businesses, the economy and citizens.

“Many businesses are currently grappling with high production
and operating cost which has made sustainability difficult for many
enterprises.

“There is also pressure of costs driven by high interest rate,
huge logistics cost, high energy cost, and high regulatory
compliance costs.

“Businesses often have difficulties in passing these additional
costs to customers because of the weak purchasing power by many of
the citizens.”

Yusuf noted that the LCCI had advocated that rather than
increase tax rates, the government should broaden the tax base by
bringing into the tax net numerous persons and enterprises that
were not tax compliant.

He said for an economy contending with high unemployment, “we
should be talking about economic and fiscal stimulus at this time,
not an additional burden of tax.”

Yusuf added that in order to ensure fiscal sustainability of the
government, it was important to address issues of the cost of
governance.

He said, “The recurrent expenditure of government is too high,
cost of governance is humongous. There is need to prune both
overhead and personnel costs.

“The reform of the oil and gas sector would also boost
revenue through the attraction of new investments.”

By: Sunday Aborisade, Friday Olokor, Sam Awoyinfa
and Adelani Adepegba