‘VAT Increase Will Push Up Inflation Rate, Shrink Purchasing Power’
GILBERT EKUGBE
“An increased Value Added Tax (VAT) will consequently increase inflation rate, as big businesses will see it as an excuse to raise prices of goods and services.
With the increase in prices of goods and services, Femi Egbesola, National President, Association of Small Business Owners of Nigeria (ASBON) believes purchasing power of impoverished Nigerian income earners will shrink further.
Egbesola spoke at a press briefing where he aired his views and suggestions about the proposed plan by the federal government hike VAT from 5 to 7.2 per cent in 2020.
He advised that instead of increasing VAT, the federal government should focus on increasing the tax net rather than squeezing life out of the business community already beset with myriads of challenges.
“Rather than an increase in VAT at this time, 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 increase,” he advised.
He stated that the VAT increment shows nothing but 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 naira loan at 5 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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