By Ayomide Otitoju
The Trade Union Congress (TUC) has firmly opposed the Federal Government’s proposed increase in Value Added Tax (VAT) rates from 7.5% to 10%, 12.5%, and eventually 15%, as outlined in one of the draft tax reform bills.
In a statement on Tuesday, TUC President Festus Osifo argued that retaining the VAT rate at 7.5% is crucial to alleviating the financial burden on Nigerians already grappling with economic challenges.
“Allowing the VAT rate to remain at 7.5% is in the nation’s best interest,” Osifo said. “At a time when inflation, unemployment, and the cost of living are soaring, higher taxes would further strain households and businesses, slow economic growth, and reduce consumer purchasing power.”
Support for NASENI and TETFUND
The TUC also praised the contributions of the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFUND) to Nigeria’s development.
“These institutions have been instrumental in advancing tertiary education and adopting homegrown technologies to enhance productivity and self-reliance. Their continued existence is vital for sustaining progress in education, technology, and economic development across the country,” the statement read.
Welcoming VAT Derivation, Suggesting Tax Reliefs
The union expressed support for the inclusion of a derivation component in the VAT distribution among the three tiers of government, stating it could encourage productivity at sub-national levels.
“When passed into law and properly implemented, the derivation component will gradually transition us from a rent-seeking economy to a derivation-based system that stimulates economic activities,” Osifo explained.
However, the TUC called for specific amendments to the proposed tax bills, particularly on tax exemptions and royalty collections.
“The threshold for tax exemptions should be increased from ₦800,000 to ₦2,500,000 per annum. This adjustment will provide relief to low-income earners, easing the economic challenges they face and increasing their disposable income,” Osifo stated.
The union also raised concerns about the proposed assignment of royalty collection to the Nigeria Revenue Service (NRS).
“While this proposal may seem beneficial, it is likely to result in significant revenue losses for the government,” the TUC warned, urging a thorough review to ensure optimal revenue management.
The TUC emphasized its commitment to engaging with the government to ensure that tax reforms promote economic stability and protect Nigerians from further financial hardship.
