Friday, 9th June 2023

Government increases VAT to fund national minimum wage

By Terhemba Daka and Collins Olayinka, Abuja
12 September 2019   |   4:20 am
The Federal Executive Council (FEC) yesterday approved an increase in the nation’s Value Added Tax (VAT) from five per cent to 7.2 per cent effective next year.

A cross section of ministers during the inaugural Federal  Executive Council (FEC) meeting at the State House, Abuja…yesterday. PHOTO:PHILIP OJISUA

•Proposes N10tr as 2020 budget, okays N183b for roads
•Negotiators get deadline to conclude consequential adjustments

The Federal Executive Council (FEC) yesterday approved an increase in the nation’s Value Added Tax (VAT) from five per cent to 7.2 per cent effective next year.

This comes as President Muhammadu Buhari directed all parties negotiating the consequential adjustments of salaries of workers arising from the new N30,000 national minimum wage to conclude work before December 31, 2019.

Minister of Labour and Employment, Chris Ngige, made the disclosure when he received a team of media workers in Abuja.

He warned that anything to the contrary would put pressure on state governments resulting in their inability to offset the arrears that had begun counting since April 18 this year when the bill was assented to by the President.

The minister hinted that government would raise a presidential committee on the workload of civil servants with a view to adjusting their allowances to commensurate with their tasks.

Admitting that the focus of his ministry was to create jobs, Ngige, nonetheless, added that it must equally put policies in place to protect existing ones.

He noted that unemployment was reflecting in the various social vices, including banditry, kidnapping cultism and agitations across the federation.

But the Minister of Finance, Budget and National Planning, Zainab Ahmed, who disclosed the VAT increase after the FEC meeting presided over by the President yesterday in Abuja, said the decision was to enable government properly fund the new national minimum wage.

Council also sanctioned a N10.07 trillion estimate for the 2020 fiscal year.

Ahmed told State House correspondents that the gathering gave approval for her ministry to begin consultation with relevant stakeholders, including members of the National Assembly, for implementation of the revised VAT regime.

According to her, states and local councils stand a better chance to benefit from the development, as according to her, they would be able to effectively handle the challenges of salary payment and critical infrastructure funding.

FEC also sanctioned N182.68 billion for road projects across the federation.

The Minister of State for Works and Housing, Abubakar Aliyu, explained that the projects cover Lagos, Niger, Kano, Katsina, Edo, Kwara, Taraba, Jigawa, Imo, Abia, Yobe, Anambra states and the Federal Capital Territory.

The highways are the extension of Lagos-Badagry expressway project to Benin-Nigeria border at N15.2 billion; two bridges at Kontagora in Niger State for N1.1 billion; and Kano-Katsina road at N9.4 billion

Also given the green light were Kontagora-Bangi road in Niger State at N20.3 billion; Marina-Bonny Camp road, Lagos State at N9.2 billion; Edo and Kwara highways at N4.5 billion and N18.4 billion, among others.

In his remarks, the Minister of Transportation, Rotimi Amaechi said: “Council approved the revised total cost for the rehabilitation of Itakpe/Ajaokuta rail line. The contract was awarded $122 million but we requested for a total of $56 million additional works which were broken down into $38.8 million additional works and 17.2 million variation now bringing the contract of Itakpe to Warri to a total of $178.7 million.”

He added: “Then we also requested for Lagos to Ibadan with extension to Lagos port complex in Apapa. We asked for additional works for $374 million with another variation of $282 million which totalled $656.8 million added to the $1.5 billion that the contract was initially awarded.”