VAT: LCCI seeks adjustments in sharing formula
As the controversies over the collection and sharing of Value Added Tax continues to rage, the Lagos Chamber of Commerce and Industry (LCCI) has called for an adjustment in the current sharing formula for the states and Local Government Areas in Nigeria.
Making the call in Lagos, on Tuesday, at the quarterly media briefing of the Chamber, its president, Mrs Toki Mabogunje, stated that the present arrangement where the states and LGAs share their allocation using the factors of equality 50%; population 30%; and derivation 20%; be adjusted.
The LCCI boss argued that, in order to drive innovation on revenue generation, a new sharing formula using the factors of equality 20%; population 30%; and derivation 50%, should be agreed upon and used by all concerned parties.
She argued that, besides boosting their IGR, the new formula, if adopted, would make the states to be more sensitive to the needs of businesses in their respective domains; since whatever affects businesses negatively would also affect their ability to pay their taxes.
The Chamber also expressed concerns about the rising cost and proportion of revenue used to service public debts.
“98% of revenue according to the Presidential Economic Advisory Council (PEAC) based on the actual revenue generated in the first half of the year is creating fiscal distortions of significant proportions, though the Debt Management Office (DMO) stated that 43% of revenue is budgeted to service debt, based on projected debt service and revenue for 2022.
“Since revenue fundamentals are currently weak, the ideal thing is to reduce the cost of borrowing, specifically, the high deficit and debt cost projected in the Mid Term Expenditure Framework (MTEF 2022-2024),” she stated.
Mabogunje, however, advised the federal government to focus more on non-interest asset-linked securities, in order to unlock revenue and growth in the long term.
She also counselled the federal government on the need to allow the private sector invest in some infrastructure projects that are commercially viable to generate incomes for repayment of funds expended.
Commending the federal government on the new Petroleum Industry Act 2021, the LCCI’s boss expressed the belief that the new law would open windows of opportunities in the oil and gas industry, with renewed optimism for increased inflow of investments, revenue generation boost, and job opportunities.
“The new law has put an end to the decades of uncertainties concerning the future of the oil and gas industry in Nigeria. The Petroleum Industry Act (PIA) provides a robust legal framework that will support the reforms required to position the industry as an investment haven that attracts investors from across the globe,” she added.
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