The Federal Government has raked in N10.1 trillion from the collection of Value Added Tax under the regime of the President Muhammadu Buhari.
This comes against the backdrop of the advice by the Minister of Finance, Zainab Ahmed, that the incoming government should increase the VAT from the current 7.5 per cent to 10 per cent.
VAT is a 7.5 per cent consumption tax administered by the Federal Inland Revenue Service (FIRS) when goods are purchased and services are rendered, and it is borne by the final consumer.
A value-added tax (VAT) is paid at every stage of a product’s production from the sale of the raw materials to its final purchase by a consumer, and thus the tax is ultimately paid by the consumer.
Meanwhile, revenue generated from VAT is usually disbursed to the three tiers of government through the Federation Accounts Allocation Committee.
An analysis of reports obtained from the National Bureau of Statistics showed that the VAT earnings continued to rise annually throughout the eight-year period.
The country earned N759.4 billion in 2015, N777.5 billion in 2016, N972.4 billion in 2017 and N1.1 trillion in 2018.
VAT collections in 2019 amounted to N1.2 trillion, N1.5 trillion in 2020, N2.1 trillion in 2021 while N2.5 trillion was paid in 2022.
BUSINESS METRICS reports that the significant increase in VAT collection in the past two years is directly connected to the decision by the Federal Government in 2020 to increase the VAT rate from five per cent to 7.5 per cent.
This was part of the tax reforms included in the 2019 Finance Act meant to help the government achieve its revenue projections.
Meanwhile, BUSINESS METRICS reports that prominent economists have cautioned against plan to further increase the VAT from the current 7.5 per cent to 10 per cent by the incoming administration. (READ MORE)
Experts Warn against VAT Rate Hike Plan
