FG Urged to Increase VAT Rate Amid Tax Reform—NESG warns

Keep up with the latest news and be part of our weekly giveaways and airtime sharing; follow our WhatsApp channel for more updates. Click to Follow us

The Nigeria Economic Summit Group (NESG) has cautioned that the Federal Government may face significant revenue shortfalls if it fails to increase the value-added tax (VAT) rate as part of the ongoing tax reform process. Dr. Tayo Aduloju, Chief Executive Officer of NESG, emphasized the importance of VAT rate adjustments during an interactive media session in Abuja.

“Without those rate hikes, it means that the government might lose some revenue,” Aduloju stated, highlighting the need for a balanced approach to tax reform. He explained that simplifying the tax system and increasing the VAT rate are crucial for maintaining revenue stability.

For further information, read more details here

Aduloju noted that reducing the number of taxes without adjusting the VAT rate could weaken the government’s revenue base. However, he acknowledged that postponing the rate hike by three years could still yield positive results. “If we win on the reform of the VAT system, and even if we postpone the rate hike by three years, it will still be a win. That will immediately show efficiency, and we can attract more companies to invest in Nigeria.”

The NESG boss stressed the importance of unlocking investment opportunities to support revenue generation, citing Nigeria’s potential to attract foreign direct investment if legal, regulatory, and policy bottlenecks are addressed.

Aduloju also advocated for better coordination between monetary and fiscal policies to tackle inflation, particularly those driven by high energy costs. “Energy security remains a key factor influencing inflation, with inefficiencies in the downstream petroleum sector contributing to persistent price hikes.”

However, the proposed VAT rate increase has faced opposition from the Trade Union Congress of Nigeria and the Nigeria Governors’ Forum, who warn that it could exacerbate economic hardship. The House of Representatives has also rejected a staggered VAT rate increase to 15% by 2030, opting to retain the current 7.5% rate.

Please don’t forget to “Allow the notification” so you will be the first to get our gist when we publish it. 
Drop your comment in the section below, and don’t forget to share the post.