The Minister of Finance, Budget and National Planning, Zainab Ahmed, has ruled out any further increase in the Value Added Tax.
The minister stated this on Thursday when she appeared before the Senate Committee on Finance to defend the Ministry’s 2021 Budget estimates.
President Buhari had early January 2020 assented to an Act of the National Assembly raising the VAT from 5 to 7.5 per cent. The government commenced the implementation of the new VAT rate on February 1, 2020.
Prior to her appearance before the Senate Committee on Finance, the minister had on Tuesday also appeared before the House of Representatives Committee on Finance chaired by Hon. James Faleke to defend the ministry’s 2021 Budget.
At the House, the minister was reported to have unveiled plans to introduce additional 2.5% Value Added Tax (VAT) rate in 2021 fiscal year as part of efforts aimed at increasing revenue generation.
The Chairman of the Senate Committee on Finance, Adeola Olamilekan, had asked the minister of the current state of the 2020 finance bill.
She was also asked to address speculations as to whether there are plans to increase VAT again.
“This current budget was predicated on $40 per barrel but as we speak the current price of the crude oil in the market is $37, what are the contingency plans as far as you are concerned going forward. Also, there is a misrepresentation of information that there will be every likelihood we increase the VAT again by 2.5 per cent. Is that a statement of fact or a statement of misrepresentation?,” Olamilekan asked.
In her response, the Finance minister explained that the actual projection was $40 per barrel and that is the average price that will be projected for the year.
“Some of the institutions that are responsible for tracking the price of crude oil, actually have crude oil prices going as far as $50, $52 per barrel. We took the safer path. It seems the second wave of COVID-19 in Europe is affecting us and we are hoping to have clarity as to which direction to take in the next week or two.
“As for the finance bill, we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of recovery – not only for the government but businesses as well.”
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