FG Taking Back Increment On Minimum Wage From 7.5% VAT – Expert
An economist and Dean, Faculty of Social Science, Kaduna State University, Aminu Usman has described the new minimum wage and the 50 % increase in VAT approved by the federal government as “give and take policy.”
President Muhammad Buhari had signed the increment in the country’s minimum wage from N18,000 to N30,00 in April 2019 to douse agitation by the Nigerian Labour Congress (NLC), an increment by 67%.
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Following the increase, the FG review its tax policy in the same year leading to the signing into law of the Finance Act, 2019.
Usman told THE WHISTLER that contrary to the claim of President Buhari, the increase in the tax policy will be burdensome on the average Nigerian.
Usman further described the Finance Act as, “giving with the left hand and taking back with the right hand,” adding that the minimum wage will suffer due to leakages as a result of the new VAT.
“The tax is burdensome on every average citizen, because when your income is stagnant, and government is taking more out of it, it becomes a burden.
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“It looks like the federal government giving with the left hand and taking with the right. The FG increased minimum wage but then increased VAT and other classes of taxes which means what the government is giving the people it is already taking it back,” Usman told THE WHISTLER.
The expert argued that the economy may not be viable enough to contain the adverse effect of the hike in VAT.
“People think because it is just 2.5%, its negligible, but it is 50% of what has been on ground and its really burdensome.
“I think it is not a good time for the increment of any tax in the country as it will affect businesses, as consumers may not be able to conveniently buy the affected products.”
He said the market had already reacted to the increase in terms of hike in prices, stressing that if a worker has a nominal increase of N10,000, inflation due to expectation by the marketers will take N5000 while government also takes its own part in terms of VAT and other taxes.
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“Although the VAT is not applicable to all product, phone calls, SMS and data have been affected,”he said.
Meanwhile, Nigerians have however taken their grievances to twitter as they described the 7.5% new VAT rate as an additional burden on citizens as well as businesses.
The country has over 184 million mobile subscribers and over 90 percent of the population who access the internet through mobile phones have been hit by the new tax regime which took effect February.
Reacting, Obinna Nwosu said on twitter- @obiNwosu: “I remember when APC sent @Ayourb on national television to explain to Nigerians how 7.5% VAT increase will not affect the poor masses. Now the poor masses are crying the most.
“Oh my God. Propaganda is dangerous.”
Another user : “Nigerian are passing through hell mostly Lagosian, 7.5% VAT from data n recharge card, Iyana Ipaja is on fire, okada is ban, no job in the country, nobody to help, what a hell of country.
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“God should just pack all this our bad leaders in one private jet n set them ablaze.”
