- Says VAT not targeted at poor Nigerians
James Emejo in Abuja
The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, Tuesday said the agency was targeting about N750 billion revenue from about 55,000 defaulting taxpayers.
He told the House of Representatives joint committees on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), during a budget defence session that the substitution led to recovery of N23.25 billion.
He restated that the 85 per cent of VAT collected goes to State Governments. Fowler said:“From the Bank Accounts substitution exercise, we used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. It has so far resulted in the recovery of N23.35 billion. The exercise has been extended to cover those with turnover of N100 million and above.
“To date about 500 of them have come forward and they have paid and we have collected in the region of about N24 billion. We believe we should be able to go through the 55,000 before the middle of this year which will be the middle of this year, 30th June 30th.
In terms of estimates, which we should be able to be able to generate from this exercise alone, that will be about N750 billion.” In a statement issued by FIRS spokesman, Mr. Wahab Gbadamosi, Fowler who noted that the service recorded an increase in VAT collection between 2015 and 2018, stressed that it was broadening its VAT collection scope with the adoption of States Accountants Generals (SAG) collection platform, VAT Auto-Collect, integration of the GIFMIS platform with Ministries, Departments and Agencies, (MDAs) and through e-Service payment options.
He, however, insisted that VAT is not for the poor: “Out of about N5.3 trillion, a large percentage is shared between states and local governments. In VAT, there has been a growth of over 44 per cent between 2015 and 2018. And that is at the current rate of 5 per cent.” He said:“Now when you look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic food is not VATable, medicals, education. But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT. So VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT. So its (VAT) not a hardship on the low income earners because normally they don’t even go to hotels when their wives can cook at home and they can have something very nice.
“But the same Nigerians who are complaining about an increase are the same ones who go to Ghana and go and pay triple the amount in VAT or go to London and pay higher amount.
“So we are just saying, like the minister said that we should get used to the idea. And 85 per cent of VAT goes to the State Governments who are supposed to be closer to the people. So they can use that money as approved by their State Houses of Assembly. So they can use that money on education, infrastructure, etc.
“Yes, we had in increase of about 32 per cent from N4.02 trillion in 2017 to N5.3 trillion in 2018. At the Federal level, clearly we can see all the projects that are being completed, based on the available funds at the Federal level. I’m just saying that if we keep on the same way, the expectations cannot be different. “For those who have the ability and the desire to take the choice, of going to areas where they have to pay VAT, then they should be allowed to pay VAT.”
The FIRS Chairman told the committee that through enforcement activities in respect of defaulting taxpayers from various tax offices, tax audit and investigation assessments, FIRS has generated the sums of N28. 51 billion and 77. 83 million dollars has been recovered.