Nigerians may witness the suspension of the 7.5 per cent Value Added Tax reintroduced on Automotive Gas Oil (diesel) import as the Chairman of the newly inaugurated Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has hinted.
President Bola Ahmed Tinubu last week appointed Oyedele as the chairman of the committee.
In his new role, Oyedele would lead tax law reform, harmonization of taxes, and fiscal policy design among other tasks.
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Tinubu’s plan is to expand the tax bracket in other to realise more revenue to fund his government.
“Our aim is to transform the tax system to support sustainable development and achieve a minimum Tax-to-GDP ratio of 18 per cent within the next three years, without stifling investment or economic growth,” said Adelabu Zacch Adedeji, Tinubu’s Special Adviser on Revenue.
In a revealing post on Twitter Oyedele insisted on his position against ‘taxing poverty.’
In a reply to a critic the Chairman said the exemption of Nigerians earning less than N30,000 from being taxed as well as the exemption of small businesses earning N25m or less from VAT.
Recently, the Nigeria Customs Service at the instance of the Federal Inland Revenue Service notified diesel importers of the implementation of VAT from July, 2023.
According to Customs, the VAT Modification Order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00.
But diesel falls under HS Code 2710.19.21.00.
Oyedele said, “I am currently advocating for the 7.5 per cent VAT on diesel to be suspended given the impact of the rise in transportation and other costs as a result of petrol subsidy removal.
“Advocacy for government to reduce minimum tax rate which forces struggling companies to pay tax even when they are loss-making.”
Nigerians had groaned over the new tax believed to impact energy costs after fuel subsidy removal.
The Chief Executive Officer of the Center for the Promotion of Private Enterprises, Muda Yusuf, had said, “It will be difficult to give an estimate on the potential percentage increase a 7.5 per cent VAT will cause on goods and services. However, energy cost as a representation of the total cost of production is around 25 per cent and 30 per cent.
“Going by this, a 7.5 per cent VAT on diesel might result in something around 5 per cent to 10 per cent increase in the cost of locally manufactured goods”