‘Financial Burden’: TUC Rejects FG’s Proposed VAT Increase

The Trade Union Congress (TUC) has rejected the Federal Government’s proposal to increase Value Added Tax (VAT) from 7.5% to 10%, 12.5%, and finally 15%, as outlined in one of the tax reform bills.

TUC President Festus Osifo said in a statement on Tuesday that “allowing the VAT rate to remain at 7.5% is in the best interests of the nation, as increasing it would place an additional financial burden on Nigerians, many of whom are already struggling with economic challenges”.

“At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power,”.

The union praised the National Agency for Science and Engineering Infrastructure (NASENI) and Tertiary Education Trust Fund (TETFUND) for their significant contributions to the country.

“Both have played important roles in improving our tertiary education and promoting the use of homegrown technologies to increase national productivity and self-reliance.”

Their continuous presence is critical to supporting advances in education, technology, and economic development across the country,” the TUC stated.

The TUC praised the addition of the derivation component in VAT distribution across the three levels of government.

Osifo added: “When passed into law and properly implemented, it will encourage productivity at the sub-national level thereby move us gradually from a total rent-seeking economy to a derivation-based system that will stimulate economic activities.

“We feel that increasing the tax exemption threshold from ₦800,000 to ₦2,500,000 annually would greatly benefit Nigerians. This will benefit low-income Nigerians by raising their discretionary income and alleviating their economic hardship.

The proposed measure to delegate royalty collection to the Nigeria income Service (NRS) appears to be helpful on the surface, but it is likely to result in considerable income losses for the government.”