Expand tax net, not VAT, to increase IGR, NECA tells governments

The Nigeria Employers Consultative Association (NECA) has called on state governments to engage in an aggressive taxpayer enlightenment as well as expansion of their tax net to increase their Internally Generated Revenue (IGR).

The call was made following President Muhammadu Buhari’s advice to State Governments to increase Value Added Tax (VAT) in an attempt to increase their IGR.

NECA said that increasing VAT this time to increase IGR is not only misplaced but will further impoverished citizens that he promised to take out of poverty as well as do more harm to the already burdened private sector.

Director-General, NECA, Timothy Olawale, who stated that the President meant well by urging state governments to be innovative in increasing their IGR, and at the same time prudent in their expenditures, also argued that state governments cannot unilaterally increase VAT without the amendment of the VAT Act at the National Assembly.

According to him, it is the common man that will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb.
 
Proposing a way out, Olawale said both the federal and state government must engage in an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens, stating that less than 40% of Nigerians are tax compliant.He suggested that the States should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find their way into government coffers.

Olawale advised governors on reduction on cost of governance, while several unnecessary retinues of aides kept by them at prohibitive cost to the State are needless.

“Besides, ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by State government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses.”