In a resounding call for equitable economic policies, the Trade Union Congress of Nigeria (TUC) has firmly opposed the Federal Government’s proposed increase in the Value Added Tax (VAT) rate. The union warned that the plan, which is part of the government’s Tax Reform Bills, risks deepening the economic challenges faced by millions of Nigerians already burdened by inflation, unemployment, and a steep cost of living.
The Federal Government’s proposal outlines a phased increase in the VAT rate, moving from the current 7.5% to 10%, then to 12.5%, and ultimately 15%. However, during a press briefing in Abuja on Tuesday, TUC President Festus Osifo described the proposal as ill-conceived and detrimental to the welfare of citizens. The briefing followed the union’s National Executive Council meeting held on November 26, 2024.
“Maintaining the VAT rate at 7.5% is crucial to protecting Nigerians from additional financial strain,” Osifo stated. “Allowing an increase at this time would impose an unbearable burden on households and businesses already grappling with severe economic challenges.”
Osifo emphasized that higher VAT rates would exacerbate the current economic difficulties by stifling growth, reducing consumer purchasing power, and potentially driving more Nigerians into poverty. “With inflation, unemployment, and the cost of living on the rise, this policy would hinder economic recovery and erode the financial stability of millions,” he added.
A Call for Meaningful Tax Reforms
In response to the proposed VAT hike, the TUC urged the government to adopt tax policies that prioritize the welfare of citizens. Among the key recommendations is a review of the tax exemption threshold, which the union suggested should be increased from N800,000 to N2.5 million per annum. This measure, Osifo argued, would provide much-needed relief to low-income earners and stimulate economic activity.
“Raising the tax exemption threshold to N2.5 million per annum would enhance disposable income, boost consumer spending, and support struggling Nigerians,” Osifo explained. “It is a pragmatic approach to easing financial strain and fostering economic growth.”
Concerns Over Royalty Collection and Revenue Efficiency
The TUC also voiced apprehension about the proposed transfer of royalty collection responsibilities from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to the Nigeria Revenue Service (NRS). The union warned that such a move could lead to inefficiencies and revenue losses due to the NRS’s lack of technical expertise in oil and gas operations.
“Royalty determination and reconciliation require specialized knowledge in oil and gas activities, which the NUPRC possesses but the NRS lacks,” Osifo noted. “This shift could result in inaccurate assessments, enforcement challenges, and diminished investor confidence.”
Commendation for Sustained Investment in Education and Technology
While expressing its concerns, the TUC commended the Federal Government for retaining the Tertiary Education Trust Fund (TETFund) and the National Agency for Science and Engineering Infrastructure (NASENI). Osifo described these institutions as pivotal to Nigeria’s educational and technological advancement.
“TETFund and NASENI have played significant roles in improving tertiary education and fostering homegrown technological innovations,” he said. “Their continued existence is vital for sustained progress in these critical sectors.”
Proactive Policies for Equitable Growth
The TUC reiterated its call for tax policies that balance revenue generation with the welfare of citizens. As discussions around the Tax Reform Bill progress, the union stressed the importance of adopting measures that promote equitable economic growth and improve living conditions for all Nigerians.
“Proactive and citizen-centred reforms are the hallmark of true leadership,” Osifo declared. “We urge the government to embrace policies that foster inclusive growth and prioritize the needs of the people.”
In conclusion, the TUC reaffirmed its unwavering commitment to advocating for policies that uplift Nigerians and protect their economic well-being. As the debate over tax reforms continues, the union’s stance underscores the need for a people-centred approach to economic policymaking in Nigeria.
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