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Small business owners fret over proposed VAT increase

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Tax

The Association of Small Business Owners of Nigeria (ASBON) has kicked against the proposed plan of the Federal Government to increase Value Added Tax from five per cent to 7.2 per cent.
  
The association through its National President, Dr. Femi Egbesola, explained that an increase in tax consequently increases the inflation rate.
  
While big businesses could take advantage of such increment to increase the prices of goods and services, Egbesola said the increase would also shrink the purchasing power of the already impoverished Nigerian income earner further.
  
Egbesola stated this at a press briefing in Lagos to represent the many voiceless small and medium scale business owners spread across the federation.
  
He advised that instead of increasing VAT, the Federal Government should focus on widening the tax net rather than squeezing the life out of the business community already beset with myriads of challenges.
  
“Rather than an increase in VAT at this time, the compliance rate of the present VAT rate should be strengthened; other avenues could be explored in the short term too. Even though a VAT increase may at some point be unavoidable, now would be a bad time for an increase,” he advised.
 
He stated that the VAT increment shows nothing but a lack of creativity by the federal government, saying that wise nations do not use tax increase for revenue generation any longer.
  
He stated: “Basically, the increment will directly be transferred to customers such that it will impact on their earnings and savings. However, the downturn for registered businesses such as ours will be that customers will now prefer to patronize substandard products.”
  
He said many of its members are yet to secure the Central Bank of Nigeria (CBN) Agri-Business Small and Medium Enterprise Investment Scheme (AGSMEIS) loans where Small and Medium Enterprise (SMEs) are expected to be able to access as much as N10 million loan at five per cent interest rate per annum.
  
“This is a demoralizing experience, frustrating the growth of our business and threatening its survival. The moment after pushing several times without success, many are giving up. This is not good for our economy. If the government really and truly wishes to grow the MSME sector, more than the usual attention and action need to be paid to our teeming needs,” he added.

 


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