TUC Opposes VAT Hike, Warns Of Economic Hardship

The Trade Union Congress of Nigeria (TUC) has rejected the Federal Government’s proposal to increase the Value Added Tax (VAT) rate, warning that the move could exacerbate economic hardship for Nigerians.

The proposed phased hike, outlined in the Federal Government’s Tax Reform Bills, would see VAT rise from the current 7.5% to 10%, 12.5%, and ultimately 15%.

Speaking during a press briefing in Abuja on Tuesday, TUC President Festus Osifo criticized the plan as ill-timed and harmful to citizens already grappling with inflation, unemployment, and a high cost of living.

Naijaonpoint reports that Osifo stressed the importance of maintaining the VAT rate at 7.5%, noting that any increase would impose a heavier burden on struggling households and businesses.

“Allowing the Value Added Tax rate to remain at 7.5 per cent is in the best interest of the nation. Increasing it now would impose an additional burden on households and businesses already struggling with economic challenges,” he said.

“With inflation, unemployment, and the cost of living on the rise, higher taxes could stifle economic growth and erode consumer purchasing power,” Osifo added.

Call For Revised Tax Exemption Threshold

The TUC also urged the Federal Government to review the tax exemption threshold, proposing an increase from ₦800,000 to ₦2.5 million per annum.

“This measure would increase disposable income, stimulate economic activity, and provide relief to struggling Nigerians,” Osifo explained.

He emphasized that raising the threshold would “offer much-needed relief to low-income earners, enabling them to cope with the current economic challenges.”

In addition to opposing the VAT hike, the TUC expressed reservations about the proposed transfer of royalty collection duties from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to the Nigeria Revenue Service (NRS).

“Royalty determination and reconciliation require specialised technical expertise in oil and gas operations, which the NUPRC possesses but the NRS lacks. This shift could result in inaccurate assessments, enforcement challenges, and reduced investor confidence,” Osifo warned.

The union commended the government’s decision to retain the Tertiary Education Trust Fund and the National Agency for Science and Engineering Infrastructure, describing their roles as pivotal to national development.

“These institutions have significantly contributed to improving tertiary education and fostering homegrown technologies. Their continued existence is vital for sustained progress in education, technology, and national development,” Osifo said.

The TUC urged the Federal Government to adopt tax policies that prioritise the welfare of citizens and foster equitable economic growth.

“As discussions on the Tax Reform Bill continue, it is our hope that the focus will remain on fostering economic growth and improving living conditions for all Nigerians,” Osifo concluded.

The union reaffirmed its commitment to advocating for policies that enhance the well-being of Nigerians, emphasizing the need for proactive, citizen-centred reforms as a hallmark of true leadership.