Controversial bill to increase VAT from 5 to 7.5% passes second reading in Senate

A bill which seeks to increase Value Added Tax (VAT) from 5 per cent to 7.5 per cent Wednesday passed second reading in the Senate.

The bill, which has generated much controversy in the country, was passed for second reading amid complaints by some senators that they were not given copies of it and did not know what the proposed legislation contained.

The bill entitled ‘Nigeria tax and fiscal law, 2019’ was sponsored by Yahaya Abdullahi, the Senate Majority Leader.

During the Wednesday plenary, Abdullahi moved a motion for the bill to be debated, and read the lead paper.

But the senator from Adamawa South, Binos Yaroe, raised a point of order and told Senate President Ahmad Lawan he and some other senators did not have copies of the bill.

He reminded the Senate President, “Our rules say that printed copies of the bill shall as soon as possible be sent to every senator.

“We are at the stage of the second reading of this bill. I don’t know for others but I have not received the bill, I don’t know how we can debate a bill that we have not received.”

Responding, Lawan noted his observation but said, “We are at this point going to debate the general principles of the bill and in line with our tradition, convention here, even the appropriations bill that we debate, we don’t have the bill normally.”

The same observation was also raised by Betty Apiafi representing Rivers West.

But again, Lawan replied, “When the Senate Committee on Finance reports this, the bill will be made available and we can compare with what we are amending.”

Abdullahi had said while reading out the bill, “The bill has five strategic objectives, the first one is to promote fiscal equity by mitigating instances of regressive taxation. The second one is to reform domestic tax laws to align with global best practices.

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“The third is to introduce tax incentives for investment in infrastructure. The fourth objective is to support ongoing ease of doing business reforms and the fifth objective is to raise revenues for the government including a proposal to increase the value-added tax from 5% to 7.5%.”

According the senate leader, when passed, the bill would amend the company tax CAP C21 laws of the federation of Nigeria 2004, VAT CAP 4 2007, customs and excise tariff act CAP C49 laws of the federation, personal income tax E8 laws of the federation, capital gains tax act CAP C1 laws of the federation, stock duty act 58 laws of the federation and petroleum profit tax law.

An increase in VAT was approved by the Federal Executive Council (FEC) about two months ago.

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