Immediate former Minister of Finance, Zainab Ahmed says the federal government plans to raise value-added tax to 7.5% by 2020 from the present 5%.
Speaking at the Bloomberg Emerging & Frontier Forum in London, the former minister, whose tenure ended with President Muhammadu Buhari’s first term on May 29, said that her main preoccupation while in office was how to raise government’s revenue with only 55 per cent of targets being met.
According to her, the new plan would help the federal government improve revenue generation.
“We have developed a strategic revenue growth initiative, which we have started implementing,” Ahmed said.
“Our target is to increase revenue to 65 per cent minimum in 2019 so that in the next three years, we are able to attain 80-85 per cent of our revenue target.
“We are looking at adding value-added tax from 5% to 7.5%. 5% is one of the lowest VAT globally. The increase will not be done overnight but hopefully, by the next budget (2020), the new increase will take effect.
“We recently increased the minimum wage and one of the agreements we had with labour was that there would be some marginal increase on VAT to enable us to handle the incremental cost of increasing wages.”
Recently, there has been uproars about the value added tax, In April, following a public backlash, Executive Chairman, Federal Inland Revenue Service ((FIRS), Babatunde Fowler, refuted reports it had proposed a 50 per cent increase in VAT when he appeared before the National Assembly to defend the agency’s 2019 budget.
But Fowler maintained that his position was misrepresented as he actually recommended an increase in the number of Nigerians and companies paying VAT and not the other way around.