TUC rejects FG’s proposed VAT hike

In a statement today, TUC President Festus Osifo stated that maintaining the VAT rate at 7.5% is in the nation’s best interest, as any increase would impose an additional financial burden on Nigerians already grappling with economic difficulties.

“At a time when inflation, unemployment, and the cost of living are rising, higher taxes would exacerbate household and business struggles, potentially stifling economic growth and reducing consumer purchasing power,” he explained.

The union also highlighted the significant contributions of the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFUND) in advancing the country’s development through their respective mandates.

“These agencies have played key roles in enhancing tertiary education and fostering the adoption of indigenous technologies to boost national productivity and self-reliance. Their continued operation is crucial for sustaining progress in education, technology, and economic development nationwide,” the TUC noted.

The union welcomed the inclusion of a derivation component in VAT distribution among the three tiers of government.

Osifo noted that when implemented effectively, this provision would incentivize productivity at the sub-national level, gradually shifting the economy from reliance on rents to a derivation-based model that stimulates economic activities.

However, the TUC expressed concerns about certain aspects of the tax bills, suggesting two key revisions:

1. Tax exemption threshold: The current exemption threshold of ₦800,000 per annum should be raised to ₦2,500,000 per annum to provide relief for low-income earners and alleviate their economic challenges by increasing disposable income.

2. Royalty collection: Assigning royalty collection to the Nigeria Revenue Service (NRS) may appear advantageous but could result in significant revenue losses for the government.

The union urged the Federal Government to carefully consider these adjustments to ensure the proposed tax reforms benefit Nigerians.