Senate, has passed the 56 amendments on the Finance Bill, 2019 including a proposal to increase the rate of Value added Tax, VAT from 5 per cent to 7.5 per cent.
with 7.5% increment in Value Added Tax, VAT from 5% as submitted to the joint session of National Assembly on October 14 by President Muhammadu Buhari.
The bill which had proposed an increment to VAT and and some amendments to fiscal laws to ensure adequate funding of the 2020 budget was passed following presentation and consideration of the report of Senate Committee on Finance, chaired by Senator Solomon Adeola (PDP Lagos West).
It is made up of seven components including the Companies Income Tax, Value Added Tax, Customs and Excise Tariff, Personal Income Tax, Capital Gains Tax, Stamp Duties and Petroleum Profit Tax, respectively.
The bill had proposed to introduce tax reforms which will help government achieve its revenue projections for the 2020 budget.
Some of the proposals in the bill include an increase in VAT rate, moderation of inefficient and ineffective tax incentive and closing loopholes in the existing tax laws that allows tax avoidance resulting in tax revenue leakages among others.
Before yesterday’s consideration and passage of the bill, the Senate Committee on Finance had conducted a public hearing to seek additional inputs of stakeholders
The bill had also sought to promote fiscal equity by mitigating instances of regressive tax invasion, reforming of domestic tax laws to align with global best practices;
Introducing tax incentives for investment in infrastructure and capital markets.
It had also sought to support small businesses in line with the on-going reform on the ease of doing business and raising of revenues for government, by various fiscal measures, including a proposal to increase the rate of VAT from 5 per cent to 7.5 per cent.
Contributing to the report, the Senate Leader, Senator Abdullahi Yahaya, (APC Kebbi North), noted that the problem of revenue was a major issue in moving the nation’s economy forward and appealed to his colleagues against playing politics with the economy.
He said it was a concern that Nigeria had not been able to raise revenue for implementation of its budgets over the years and therefore urged the senators to look at the bill dispassionately.
Senator Abba Moro (PDP Benue South) stressed the need to revisit the clause on amendment of VAT, noting that the comparison of Nigeria with other develop nations as basis for the increase in VAT was not tenable.
He urged the Senate to be careful on the clause to increase VAT from 5 per cent to 7.5 percent for the interest of Nigerians.
Senator Orji Uzor Kalu (APC Abia North) however, stated that the bill which is about Nigerian people was not design to tax the poor but on luxury goods.
But Senator Gabriel Suswan (PDP Benue North East) said some of the amendment sought in the bill would definitely affect Nigerians.
He, however, urged the federal government to put in place a social safety net to mitigate the effect of the increase on VAT.
Senator Ifeanyi Ubah (YPP Anambra South) said the amendment sought on the petroleum income tax would create additional challenge to stakeholders in the industry.
He said the petroleum industry was not growing the way it should, hence the amendment would pose additional challenge to the sector.
Following debate on the report, the senate resolved into the Committee of the Whole for a Clause by Clause consideration of the bill and was unanimous affirmed through voice votes by the lawmakers.
In his remarks, President of the Senate, Dr. Ahmad Lawan, said the bill’s passage by the Senate was intended “to ensure that we (National Assembly) streamline the tax system in Nigeria and get revenue for government to provide services and infrastructure to the citizens of this country.”
“What we have done is very significant because this is to ensure we not only have credible and reliable sources of funding for the 2020 Budget, but also for subsequent activities of government.
“The revenue generating agencies will have to sit up. The National Assembly, particularly the Senate, will be mounting a lot of oversight on the revenue generating agencies. If they have targets, we must ensure they meet these targets.
“What we intend to do is to engage the revenue generating agencies on a quarterly basis to evaluate their performance on revenue generation, and to identify if there are challenges and how we can achieve better outcomes.
“I believe what we have done is not to put tax burdens on the ordinary people. What we have done is to create more revenues to provide services and infrastructure for Nigerians, including the ordinary people.
“This exercise was done in a bi-partisan manner, and that is what we are known for,” Lawan said.
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