Opinion
VAT Increase: How Fair?
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
The political atmosphere in Rivers State has been anything but calm in 2025. Yet, a rare moment of unity was witnessed on Saturday, June 28, when Governor Siminalayi Fubara and Minister of the Federal Capital Territory, Chief Nyesom Wike, appeared side by side at the funeral of Elder Temple Omezurike Onuoha, Wike’s late uncle. What could have passed for a routine condolence visit evolved into a significant political statement—a symbolic show of reconciliation in a state bruised by deep political strife.
The funeral, attended by dignitaries from across the nation, was more than a moment of shared grief. It became the public reflection of a private peace accord reached earlier at the Presidential Villa in Abuja. There, President Bola Ahmed Tinubu brought together Governor Fubara, Minister Wike, the suspended Speaker of the Rivers State House of Assembly, Martin Amaewhule, and other lawmakers to chart a new path forward.
For Rivers people, that truce is a beacon of hope. But they are not content with photo opportunities and promises. What they demand now is the immediate lifting of the state of emergency declared in March 2025, and the unconditional reinstatement of Governor Fubara, Deputy Governor Dr. Ngozi Odu, and all suspended lawmakers. They insist on the restoration of their democratic mandate.
President Tinubu’s decision to suspend the entire structure of Rivers State’s elected leadership and appoint a sole administrator was a drastic response to a deepening political crisis. While it may have prevented a complete breakdown in governance, it also robbed the people of their voice. That silence must now end.
The administrator, retired naval chief Ibok-Ette Ibas, has managed a caretaker role. But Rivers State cannot thrive under unelected stewardship. Democracy must return—not partially, not symbolically, but fully. President Tinubu has to ensure that the people’s will, expressed through the ballot, is restored in word and deed.
Governor Fubara, who will complete his six-month suspension by September, was elected to serve the people of Rivers, not to be sidelined by political intrigues. His return should not be ceremonial. It should come with the full powers and authority vested in him by the constitution and the mandate of Rivers citizens.
The people’s frustration is understandable. At the heart of the political crisis was a power tussle between loyalists of Fubara and those of Wike. Institutions, particularly the State House of Assembly, became battlegrounds. Attempts were made to impeach Fubara. The situation deteriorated into a full-blown crisis, and governance was nearly brought to its knees.
But the tide must now turn. With the Senate’s approval of a record ?1.485 trillion budget for Rivers State for 2025, a new opportunity has emerged. This budget is not just a fiscal document—it is a blueprint for transformation, allocating ?1.077 trillion for capital projects alone. Yet, without the governor’s reinstatement, its execution remains in doubt.
It is Governor Fubara, and only him, who possesses the people’s mandate to execute this ambitious budget. It is time for him to return to duty with vigor, responsibility, and a renewed sense of urgency. The people expect delivery—on roads, hospitals, schools, and job creation.
Rivers civil servants, recovering from neglect and under appreciation, should also continue to be a top priority. Fubara should continue to ensure timely payment of salaries, address pension issues, and create a more effective, motivated public workforce. This is how governance becomes real in people’s lives.
The “Rivers First” mantra with which Fubara campaigned is now being tested. That slogan should become policy. It must inform every appointment, every contract, every budget decision, and every reform. It must reflect the needs and aspirations of the ordinary Rivers person—not political patrons or vested interests.
Beyond infrastructure and administration, political healing is essential. Governor Fubara and Minister Wike must go beyond temporary peace. They should actively unite their camps and followers to form one strong political family. The future of Rivers cannot be built on division.
Political appointments, both at the Federal and State levels, must reflect a spirit of fairness, tolerance, and inclusivity. The days of political vendettas and exclusive lists must end. Every ethnic group, every gender, and every generation must feel included in the new Rivers project.
Rivers is too diverse to be governed by one faction. Lasting peace can only be built on concessions, maturity, and equity. The people are watching to see if the peace deal will lead to deeper understanding or simply paper over cracks in an already fragile political arrangement.
Wike, now a national figure as Minister of the FCT, has a responsibility to rise above the local fray and support the development of Rivers State. His influence should bring federal attention and investment to the state, not political interference or division.
Likewise, Fubara should lead with restraint, humility, and a focus on service delivery. His return should not be marked by revenge or political purges but by inclusive leadership that welcomes even former adversaries into the process of rebuilding the state.
“The people are no longer interested in power struggles. They want light in their streets, drugs in their hospitals, teachers in their classrooms, and jobs for their children. The politics of ego and entitlement have to give way to governance with purpose.
The appearance of both leaders at the funeral was a glimpse of what unity could look like. That moment should now evolve into a movement-one that prioritizes Rivers State over every personal ambition. Let it be the beginning of true reconciliation and progress.
As September draws near, the Federal government should act decisively to end the state of emergency and reinstate all suspended officials. Rivers State must return to constitutional order and normal democratic processes. This is the minimum requirement of good governance.
The crisis in Rivers has dragged on for too long. The truce is a step forward, but much more is needed. Reinstating Governor Fubara, implementing the ?1.485 trillion budget, and uniting political factions are now the urgent tasks ahead. Rivers people have suffered enough. It is time to restore leadership, rebuild trust, and finally put Rivers first.
By: Amieyeofori Ibim
Amieyeofori Ibim is former Editor of The Tide Newspapers, political analyst and public affairs commentator
Do the Fulani herdsmen have an expansionists agenda, like their progenitor, Uthman Dan Fodio? Why are they everywhere even the remotest part of other areas in Nigeria harassing, maiming, raping and killing the owners of the land?”
In a swift reaction, The Movement for the Survival of the Ogoni People (MOSOP) decried and strongly condemned the invasion by suspected Fulani herdsmen.
In his denunciation, MOSOP President Fegalo Nsuke described the incident as very unfortunate and deeply troubling, warning against a recurrence of the violence experienced in Benue State. “The killing of yesterday is bad and very unfortunate. We are getting preliminary information about how the herders gained access to the farmland, and it appears some hoodlums may be collecting money and granting access illegally.”
He called on the Hausa community in Rivers State to intervene swiftly to prevent further attacks.
“We want the Hausa community in Rivers State to take urgent action to ensure these issues are resolved”.
But will such appeal and requests end the violent disposition of the Fulani herdsmen? It is not saying something new that the escalating threat and breach of peace across the country by the Fulani herdsmen or those suspected to be Fulani herdsmen, leaves much to be desired in a country that is bedevilled by multi-dimensional challenges and hydra-headed problems.
Some upland Local Government Areas of Rivers State, such as Etche, Omuma, Emohua, Ikwerre, Oyigbo, Abua, Ogba/Egbema/Ndoni, have severally recounted their ordeals, as herdsmen invaded farmlands, destroyed crops, raped female farmers and killed protestant residents.
Again the wanton destruction of lives and properties which no doubt has overwhelmed the Nigerian Police, makes the clamour for State Police, indispensable. The National Assembly should consider the amendment of the Constitution to allow States to have their Statutory policing agencies.
As insurgency has risen to an all time high in the country were killings has now grown to be a normal daily activity in some part of the nation it may not be safe to say that Nigeria still practices democracy.
Several massacres coming from the Boko Haram and the herdsmen amongst all other insurgencies which have led to the destruction of homes and killing, burning of communities especially in the northern part of the country. All these put together are result of the ethnic battles that are fought between the tribes of Nigeria and this can be witnessed in Benue State where herders and farmers have been in constant clashes for ages. They have experienced nothing but casualties and unrest.
In the month of June 13-14, the Yelwata attack at the Guma Local Government Area by suspected gunmen or herdsmen who stormed the houses of innocent IDPs (Internally Displaced Persons) claiming the lives of families, both adults and children estimated to be 200 victims. They were all burnt alive by these unknown gunmen.
This has been recorded as one of the deadliest insurgencies that had happened in recent years. Some security personnel that were trying to fight the unknown gunmen also lost their lives.
Prior to the Yelewata attack, two days before the happening, similar conflict took place in Makurdi on June 11, 2025. 25 people were killed in the State. Even in Plateau State and the Southern Kaduna an attack also took place in the month of June.
All other states that make up the Middle Belt have been experiencing the farmers/herders clash for years now and it has persisted up till recent times, claiming lives of families and children, homes and lands, escalating in 2025 with coordinated assaults.
Various authorities and other villagers who fled for safety also blamed the herdsmen in the State for the attack that happened in Yelwata community.
Ehebha God’stime is an Intern with The Tide.
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