The Senate approved the request presented by president Buhari to increase Value Added Tax (VAT) from 5 percent to 7.5 percent on Thursday, 21 November, 2019.
The request was considered after the chairma, Senate committee on finance Solomon Olamilekan presented a report on a bill entitled “Nigeria tax and fiscal law”.
The Federal Executive Council, FEC, was in September approved an increase in value added tax while the bill was sent to the national assembly for approval.
When the request was firstly submitted in September for approval;
Robert Omotunde, Head, Investment Research at Afrinvest, adviced Nigeria to do more at VAT collections instead of VAT increasement.
“Nigerian economy is consumption-driven and as at 2018, 73% of Nigeria’s GDP was made up of consumption expenditure.
“If government tax this at 5% VAT, Nigeria should have earned N4.7 trillion in VAT but the country got N1.2 trillion instead, he said during a radio programme on Thursday.
International organisations such as the World Bank and IMF also advised Nigeria to expand its tax net and channel the funds to developmental projects and budget funding.