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VAT Increase: How Fair?

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On Tuesday, March 19, 2019, the then Minister for Budget and National Planning, Senator Udoma Udo Udoma, and the Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, hinted the National Assembly that the Value Added Tax (VAT) rate is likely to go up.
Their statement was later corroborated in July, as the Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMFAC), Engr. Elias Mbam, added his voice to the demand for an increment in VAT from 5 per cent to about 7.5 per cent to shore up Nigeria’s revenue base which he said is heavily reliant on oil earnings.
The message became clearer on September 11, when the the current Minister of Finance, Budget and National Planning, Zainab Ahmed, spoke on the proposed plan to increse VAT at the end of the Federal Executive Council meeting. She said: “We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed to increase the VAT rate from five percent to 7.2 percent”.
For the trio; Udoma, Fowler and Zainab, an increase in VAT is not just needed to shore up Nigeria’s revenue base as posited by Engr Mbam, it is necessary to enable government fund the new minimum wage of N30,000 per month approved by the National Assembly.
While the Senate Committee on Finance awaits the details on reasons for the proposed increase by the finance minister and chairman, FIRS, the move had generated mixed reactions among the public on its possible effects on living standards and the economy.
Ordinarily, increasing VAT by the government of the day shouldn’t warant the magnitude of reaction as witnessed in this case. After all, such could still serve as a veritable means of meeting the expansive fiscal expenditure needs of the federal government. Besides, the World Bank recently noted that fiscal deficits in Nigeria will likely widen further due to increased pre-election spending and sustained revenue shortfalls.
But while the need for government to bridge its revenue gap remains incontestable, and while it also reserves the right to adopt any legitimate measure in its revenue generation drive, VAT increment inclusive, the writer is rather worried about the time the VAT increase measure is deemed apt for such purpose.
If Udoma, Fowler, and Zainab’s reason for the planned increment is anything to go by, then there is need for more innovative approaches to scaling up the government’s revenue capacities so as to meet its growing funding commitments, especially, against the background of increasingly financing its fiscal deficit from borrowings.
Let us not forget that there are expectations that the increase in minimum wage could possibly be eroded by price increases of key household items, offsetting the expected improvement in purchasing power. And for the Nigerian industrial climate, you can guess what hope this portends for foreign investments and the faith of the Small and Medium Enterprises (SMEs).
I hope the government’s enamoured pursuit of increasing revenue should not be to the detriment of the wellbeing of its own citizens as the choice of VAT increase upon the prevailing economic realities could be interpreted to be.
CSL Stockbrokers confirmed the above fears when it declared that “financing the increment in the wage burden through tax increment would force companies to raise prices significantly, ultimately placing the incidence of the tax increment on the consumers. It is, therefore, considered a bad timing and inconsistent with current economic reality”.
VAT, as we know, is basically imposed on consumption. Apart from the already diminished scale of consumption in the Nigerian economy which invariably may affect the collection performance of VAT, a simple economic analysis would attest that any increase in VAT at this time, would disproportionately affect poor people. But even beyond that argument, the biggest challenge is that any increase in indirect taxes affects the prices of goods and services.
This, analysts argued, could in turn affect the country’s inflation rate. With an inflation rate of over 11 per cent, the outcome of the proposed VAT increase is very critical given that the Central Bank of Nigeria is keen to contain inflationary pressures in the economy and bring inflation back to a single digit within a target range of 6-9 percent. It is thus expected that the rise in VAT would likely lead to a rise in inflation.
Moreso, in a clime like ours where the poverty level of the general populace has eroded their economic power, VAT increase may further worsen the living conditions of consumers whose real income has been stifled over the years. According to a recent report, “one striking feature in the performance of consumer goods companies over the past 18 months, is the consistent decline in reported revenue, suggesting that consumer demand remains weak.”
Well-meaning Nigerians have said “the consequence of this hike on the lives of Nigerians that are already suffering horrendous deprivations is dire and so, capable of exacerbating the poverty that has ravaged the people” .
The writer is of the view that at a time like this, when Nigerian workers expect an upward review in their monthly remuneration, in order to be economically repositioned, a planned corresponding increase in the prices of consumer goods by the government does not portray the government as one with the intention of making positive impacts on the lives of its citizens.
By this proposal, I am afraid the government risks being interpreted as one that does not realise the depth of misery that pervades our nation and may have probably completely detached itself from the people it ought to succour; a reason, I guess, the organised labour described this planned increase as anti-people and anti-development.
The reality is that any increase in VAT will be counter-intuitive to the goals of reducing poverty and inequality given the existing high economic disparity in the country.
In fairness to all, the proposed increase in VAT, by the federal government will not only weaken the citizens’ purchasing power, but would also worsen the poverty level in the country.
I, therefore, see this obvious call on the manufacturers and stake holders in the chain of distribution to hike the cost of their merchandise to the detriment of the suffering masses, as a concept billed for still birth.

 

Sylvia ThankGod-Amadi

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Opinion

Other Sides In Junior Pope’s Death

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The tragic boat mishap of Wednesday, April 10, 2024, which claimed the lives of popular Nollywood actor, Mr John Paul Obumneme Odonwodo, popularly known as Junior Pope, and four others, has sent shock-waves across the Nigerian movie industry, and set the social media buzzing with reactions.
A contingent of 12 movie crew members had set out for a boat journey from the River Niger Cable point, a waterside jetty at Asaba in Delta State, to cross to the other side of River Niger, into Anam, a riverine community in Anambra State, for the shooting of a movie set titled ‘Another side of Life’ produced by Adanma Luke. Unfortunately, a series of avoidable events culminated the journey into an ill-fated expedition that sent fives lives to ‘the other side of life.’ The incident made the movie’s eventual ban a nullity, having played-out its symbolic meanings in real life while in the making, rather than on envisaged screens.
An avoidable incident, it exposed our society’s casual attitudes towards marine and general safety, as well as our endemic superstitions, while telling, on several flaps, other side tales of reality in the accounts of what transpired during the production, or rather, play of Adanma’s ‘Another side of Life.’
While veteran actor and Senior Adviser on Military Relations to the President of Actors’ Guild of Nigeria, Mr Steve Eboh, claimed he missed joining the ill-fated boat because he arrived too early before the crew, and had to go back, the producer, Adanma Luke, claimed she missed it because she came too late.
A journey’s jolly take-off from Asaba, Delta state, which ended tragically in its return from the other side in Anambra State, proved to be a rascally journey that showed the other side of rascality, even as T. C. Okoye claimed that pre-performing of obeisance to some marine spirits saved his life. But it was T. C. Okoye who had to hang unto a boat’s anchor in the face of death, rather than rely on the powers of the spirits he had appeased with Fanta, to await rescue from mortal men – sensible men, whose advise that one needs wear life jack during marine journeys – he had forsook, yet gave glory to his rituals after rescue.
Conversely, one may flip the flap to consider the other side of T. C. Okoye’s rituals to ruminate on other possibilities. Could the ringing of bells, spraying of money and snacks, and pouring of Fanta, have evoked the anger of the ‘marine spirits’ as rumoured, or distracted the boat driver, to the point of accident? And as reported by The Punch, what’s the significance of T. C. Okoye ‘dashing’ ritual money to innocent children whom circumstance made to be by the riverside?
Also, the argument by Mr Steve Eboh, that “If the star actors in that boat had wanted to wear life jackets, they would have been given the jackets” holds no ground, because the guild, as well as all the marine transport stakeholders, should have enforced strict safety compliance by all voyagers. It is therefore commendable that the Anambra State Commissioner of Police, Aderemi Adeoye, has ordered exhaustive investigations into the matter to determine criminal liability of all persons involved.
However, in the melee of pandemonium that accompanied rescue efforts, Nollywood celebrities, our society’s supposed role models, prioritized superstitious rescusitation over sure medical practice, rushing victims between spiritualists and hospitals, until a ‘pope’ whose work and journey had bound with the superstitious, died amidst superstition. Indeed, it’s during crises, when people care less about ‘packaging,’ that truth and the real personality of humans stand bare and naked.
While medical personnel who got their chance late had certified Jnr Pope dead, our star-persons held unto their spiritual advisers who claimed his spirit coming back to life, up until reality finally dawned that pope’s spirit has permanently crossed to the other side of life.
Regrettably, the reality has not fully dawned, otherwise three corpses shouldn’t have been buried by the riverside as dictated by spiritualists, and Jnr Pope’s family shouldn’t be worried about what would happen, as rumoured threatened of his three children, if his corpse is not buried by the riverside. However, it appears that having encountered the influence of a frontline celebrity, the spirits have turned capricious by bending divinely demands to accepting two cows, as rumoured, in exchange for Jnr Pope’s corpse being buried elsewhere.
According to the Anambra State Police Public Relations Officer, SP Tochukwu Ikenga, a team of rescuers comprising men of the Anambra State Marine Police Command, the National Inland Waterways Authority (NIWA) and the Maritime Workers Union of Nigeria, with the aid of fisher men, rescued seven persons alive to the Anambra side, while two retrieved corpses were sent across the other side, to the Delta State Marine Police Command jetty where Nollywood officials stood waiting. Of other three victims, two corpses were rescued next day, while a third was thrown out by river tides, all of whom; Abigail Fredrick (Vice Chairman of Costumer Designers Guild of Nigeria, and Akwa-Ibom State-born make-up artist), Precious Oforum (Sound engineer) and Joseph Anointing (Gaffer), have since been buried by the riverside, according to local belief.
However, what the police PRO’s statement didn’t reveal is if Jnr Pope’s corpse was sent to the other side in Delta after all the back and forth between spiritualists and medical personnel within Anambra, or if it was sent straight upon rescue to Delta state, but mysteriously found its way back to Anam, on the Anambra side.
It’s unfortunate that Nollywood which set out in its early days to expose superstitious beliefs and practices in our societies, in the hopes of enlightening the minds of the masses, and to curb the manace, has made many believe it’s rather reinforcing superstition in the ways it condicts the movie industry business.
Members of the showbiz in general, now appear to be key protagonists of superstition to the point that, being perceived as role models, so many youths have been drawn to lives of unrealistic dreams and materialism, which often get pursued through ritualism, with its attendant crimes.
Joseph Nwankwo
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Opinion

The Value Of Books And Reading

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The quality, quantity and diversity of books produced by a society are important indicators of that society’s level of development. . . .”–Valdehusa (1985).
April 23 of every year is marked around the world as ‘World Book and Copyright Day.’ Also known as ‘International Day of The Book,’ it is a Day set aside by the United Nations Educational, Scientific and Cultural Organisation (UNESCO), to promote reading, publishing and copyright. The Day aims to change lives through a love of books and shared reading.  The theme for the 2024 ‘World Book Day’ is: “Read Your Way.” This year’s theme calls on everyone to let go of pressure and expectations, giving children a choice – and a chance to enjoy reading.
According to Audrey Azoulay, Director-General of UNESCO: “Books have the unique ability to entertain and to teach. They are at once a means of exploring realms beyond our personal experience through exposure to different authors, universes and cultures, and a means of accessing the deepest recesses of our inner selves.”  Therefore, the power of books should be leveraged to combat isolation, reinforce ties between people, and expand our horizons, while stimulating our minds and creativity. It is critical to take the time to read on our own, or with our children.
Did you know that The Bible stands out as the most widely translated and distributed book worldwide? Yes, the Bible is by far the most widely translated and distributed book! Its wisdom has reached and helped more people than any other book or publication. 96.5 percent of the world’s population has access to the Bible. The Bible is available (in whole or in part) in over 3,300 languages, and the estimated number of copies of the Bible produced is 5billion, far more than any other book in history.  Which other book(s) do you enjoy or have you enjoyed reading? As for me, one book I am currently enjoying reading is a 400 – 500 page healthcare handbook titled, Where there is no doctor, authored by David Werner. It is a very valuable healthcare handbook that I have found to be very very beneficial! In fact, this healthcare handbook has been fondly described by some as “the ‘Bible’ of health education,” and I strongly recommend that every family should have a copy of this book at home. Apart from this book, I also enjoy reading for pleasure children’s books, such as those I have found on booksmart.worldreader.org and www.africanstorybook.org. What about you? What books have you enjoyed or do you enjoy reading? Do you know about the book industry? There are three major sectors of the book industry. They are: publishers, booksellers and libraries.
Book publishing is channelled towards promoting learning and expanding knowledge.  In a strict sense, book publishing starts from the point of conceptualisation of the ideas for the book by the author, and ends at the very last stage – the end-user (the reader). The history of book publishing in Nigeria can be traced to the establishment of the very first publishing press in Calabar, in 1846, by Rev. Hope Waddel of the Presbyterian Church of Scotland Mission. The press was used to print Bible lessons and later arithmetic books for schools.
In 1854, another Missionary based in Abeokuta, Rev. Henry Townsend of the Church Missionary Society (CMS), established a Press. Five years later (1859), he used it to print the very first newspaper in Nigeria – ‘Iwe Irohin.’ Thereafter, notable Nigerians like Herbert Macaulay established the first indigenous newspaper in 1926, called Lagos Daily News. Also, in the same year, Daily Times made its debut.  In 1949, Oxford University Press (OUP) floated a sales outlet in Nigeria. This action attracted many foreign-based publishing firms to Nigeria, such as Macmillan, Longman and others. The first published book in Nigeria by OUP was released in 1963, when its local branch published ‘Ijala Ere Ode’, a Yoruba poetry genre by Oladiipo Yemitan. Aside from the foreign companies, many other home-based publishing houses were architected by indigenous entrepreneurs. The book publishing industry in Nigeria has continued to enjoy drastic growth ever since.
However, in the last few decades, the Nigerian indigenous book publishing industry has experienced a downturn due to numerous challenges facing the industry, including: book piracy, proliferation of unqualified author -.publishers, lack of capital, and inability to provide adequate numbers of high-quality books.
Other challenges include: poor reading culture, infrastructural decay, dearth of expertise, incessant rancour among the major stakeholders, and so forth.
Therefore, here are some suggestions for developing our book publishing industry in Nigeria: Stakeholders such as government, publishers, authors, regulators, booksellers, libraries, and readers should cooperate among themselves and contribute their quota immensely towards the development of a virile book publishing industry.  Private investors such as banks, finance houses and influential individuals should participate, especially in terms of massive capital injection.
Ighakpe writes in from FESTAC Town, Lagos.
 Daniel Ighakpe
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Opinion

Let The Poor Breathe

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In  the history of our nation, only petroleum products have suffered more incessant increments in prices than electricity supply in all public products and services. Unfortunately, those are the two main things that impact mostly on our lives and national economy. While the increment in petroleum products’ prices is always attributed to the price of crude oil at the international market and the need to curb the scarcity by encouraging the supply, the increment in the electricity tariff has never had any justifiable reason and no service improvement afterwards. In fact, the electricity supply has gone far worse now that the tariff has gone up by over 300 percent. One of the underlying reasons for the planned electricity subsidy removal as unconsciously relayed by the Minister of Power on TVC News is the sabotage of the system by those collecting the subsidy money to maintain the assets. He said: “These are assets that we spend the country’s money on, and our brothers deliberately sabotage them. So, you can see that some people are hiding somewhere that do not want this sector to work”.
Just as the petroleum subsidy must go because the government is too impotent to handle the petroleum subsidy racketeers, the electricity subsidy has to also go at the expense of the poor masses and no one has been prosecuted for it.
When the oligarchs rob us blind, the poor masses are made to pay. The only tool that seems to be at the disposal of this government for the combat of economic challenges brought by the corruption of the political elites is to make the poor masses suffer deprivations.
No doubt, stopping the monkeys from the banana plantation is a Herculean task. But those with their thinking caps on will not need to destroy the banana plantation to ward off the monkeys. The Federal Government has taken several decisions in the last one year that are akin to milking the debilitated cow to feed the virile buffalo. The electricity tariff now has to go up to make more money for the oligarchs that sold our collective heritage to themselves and have been taking money from us for next-to-nothing service delivery.In order to win the supports of the poor masses of Nigeria, the tariff was classified and made to seem like it isn’t going to affect the poor, while the poor will invariably be the worse for it. Most of those on Band A electricity tariff, who are to be paying very exorbitantly for electricity are companies producing most of our consumables and utility items. With the high cost of electricity, the production cost will go high and consequently, the cost of the products.  By the time the effects of the new electricity tariffs take full manifestation, almost everything that can make life meaningful will be beyond the purchasing powers of most Nigerians.
I can not help but to wonder what exactly is left for us to benefit as citizens of this country. Nigeria is rapidly moving towards a capitalist nation, where everything is commercialised and profit at the expense of the citizens is the priority. Medicare and even public education are now being run for profit. The government goes about with the shenanigans of education for all, while it is making education unaffordable to most Nigerians. Even the students’ loan, as badly conceived as it is, is also with interest. Those who have been in power since our democratic dispensation belong to that generation of Nigerians that the nation had been very benevolent to. They were educated for free, got paid salaries as students and given jobs on a platter after graduation. This generation of people got everything from Nigeria and unfortunately have refused to give anything back. They have not only been ungrateful to Nigeria; they have also systematically run the country aground. What a waste of investment Nigeria has made in them! While some countries in this same Africa hardly experience power outage in a year, our own B and A category would at best experience four hours of power outage in a day. These are the ruins they have led our country to in 21st century.
The timing and manner that these anti-welfare policies were introduced are indicative of lack of concern for the citizens of this country. A lot of Nigerians have lost their lives in choking circumstances. Please, let the poor breathe! While trying to rebuild Nigeria, the poor masses should not be made to feel like the eggs in the preparation of omelette. It is very obvious that you do not care about how many eggs are broken, so long as you can have the  hen.

Abdulrasheed   Rabana

Rabana, is a public affairs analyst .

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