Reactions have continued to trail the decision of the Federal Government to increase Value Added Tax from 5 per cent to 7.2 percent in the country, as a former President of Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe, has advised government to intensify efforts at implementing the five per cent VAT rather than increasing it.
Nzekwe gave the advice in an interview with reporters in Ota, Ogun State, on Saturday, while reacting to the announcement of the increment by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.
Some Nigerians have reacted to the planned increment since the The federal Executive Council on Wednesday, approved it, with the NECA arguing that the increase will rubbish the new minimum wage of N30,000.
In his own reaction, Nzekwe noted that enforcement and implementation of the VAT was the major challenge confronting the country.
“Increasing the nation’s VAT is not the problem but the implementation is the major problem facing the country,” he said.
He explained that unless the Federal Government worked on effective implementation of VAT, the proposed policy would not achieve any meaningful result.
“VAT system should be reformed because the nation has the problem of implementation,” he said.
He said that less than 50 per cent was in the VAT net because the Federal Inland Revenue Service (FIRS) lacked the capacity to collect it.
Nzekwe urged the FIRS to redouble its efforts to get more people into the VAT net, advising the Federal Government to be cautious as the proposed increase from five per cent to 7.2 per cent would drastically affect the new minimum wage in the country.
Nzekwe said that the ability of the Federal Government to effectively reform the VAT system would make more funds available for it rather than increasing it to generate additional revenue.