NLC, NECA reject VAT increase

The Nigeria Labour Congress (NLC) on Thursday rejected any increase in Value Added Tax (VAT), as it pointed out that the planned increase in VAT would erode any benefit the increase in the national minimum wage would bring to workers and Nigerians.

Describing it as insensitive, the congress advised the Federal Government to widen the tax net and get people to pay tax, rather than over-tax those that are in the net already.

The General Secretary of NLC, Comrade Emmanuel Ugboaja, in his reaction to the planned increase said the congress reject it and warned that its impact on Nigeria manufacturers, job creation and retention, will be nightmarish.

Comrade Ugboaja said: “We reject the increase as it clearly seeks to erode whatever purchasing power the minimum wage may bring. We see it as a move not well thought through with the welfare of Nigeria wage earners in mind.

“Its impact on Nigeria manufacturers and job creation and retention will be nightmarish. It is clearly insensitive to the plight of the ordinary Nigerian. What the government needs to do is to widen the tax net and get people to pay tax and not to overtax those that are in the net as of now.”

Also, the Nigeria Employers’ Consultative Association (NECA), cautioned the Federal Government against the timing of the announced increase of VAT from 5% to 7.2%.

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Speaking in Abuja, the Director-General of NECA, Mr. Timothy Olawale said,  “the benefits of the recently signed National Minimum Wage of N30,000 would be neutralized by the proposed increase in the VAT, further reduce the purchasing power of the citizens, leading to increase in prices of goods and services, resulting in upward movement of the inflation rate, and further contraction of the economy”.

On businesses, he lamented that since the purchasing power of the citizens would have been reduced, sales of goods and services will reduce and inventories for business will be high and could lead to the closure of businesses that ought to be supported by the government in reducing unemployment rate that is currently alarming,

Mr. Olawale advised that in the event that Government must increase VAT against the will of the people, it should have been limited to luxury or ostentatious goods only.

He also urged the government to double its efforts at expanding the tax net, reduce the income gap and improve the economy through more friendly fiscal policies and promote the ease of doing business in Nigeria.