Oxfam Cautions FG on Increase in VAT

Segun Awofadeji in Bauchi

Against the backdrop of a recent article released by the International Monetary Fund (IMF) last month, where it recommended that the Federal

Government of Nigeria should increase Value Added Tax (VAT) from the current 7.5 percent, remove the official exchange rate and fuel subsidy to promote long-term, inclusive growth and strengthen Nigeria’s external position, Oxfam has cautioned that medium to long-term recovery efforts should continue promoting fiscal and policy space that allows for an increase in social spending, and progressive tax policies that collect sufficient revenue as well as redistribute wealth fairly.

This was contained in a statement signed and issued by Oxfam Communications Specialist, Rita Abiodun, and made available to THISDAY yesterday.

According to the Country Director of Oxfam in Nigeria, Dr. Vincent Ahonsi, “An increase in VAT will widen the inequality gap in Nigeria, and may plunge more Nigerians into extreme poverty.”

Oxfam opined that in Nigeria, the two richest billionaires have more wealth than the bottom 63 million Nigerians.

He added that: “Instead, Nigeria should tax the wealthy and invest the trillions that could be raised in social services and infrastructure, climate adaptation, improve early warning systems for extreme weather, help poor farmers to buy weather-indexed crop insurance, and research seeds that can better cope with droughts.”

Rather than putting further burden on the bottom 99 percent of Nigerians, Oxfam reiterated its earlier recommendations to the Nigeria Government to claw back the gains made by billionaires by taxing the huge new wealth made since the start of the COVID-19 pandemic through permanent wealth and capital taxes.

Also, the recommendations implored the Nigerian Government to take advantage of the COVID-19-related offers of debt relief to get its current debt service suspended, and negotiate a comprehensive cancellation of its overall debt as soon as possible.

Other recommendations suggested an increase in government spending on education and health, and ensure that more of all its social spending gets to the poor to address chronic underfunding of public services and very poor outcomes/coverage for the poorest.

Oxfam further suggested the scaling up of social protection, including enacting the social protection plans for the country, to meet coverage levels more in line with Nigeria’s middle-income status, improve transparency and accountability by publishing budgets both at the federal and state levels and enabling greater scrutiny of future allocations and expenditures by making budgets publicly available.

The statement concluded with a call to the federal government to tackle sexist laws that discriminate against women and create new gender-equal laws to uproot violence and discrimination.