It is what it is: Nigeria is planning to introduce an additional 2.5% in VAT, to bring the total to 10%, Tribune reports. The government is looking for money but since there is really nothing productive happening at scale, except financial engineering, the only way is to tax those transactions. Personally, I expect our VAT to hit 18% by 2027 unless there is a foundational redesign of the architecture of Nigeria’s economy.
Today, we are orthogonal and out of phase to what we should be doing. You cannot be scaling human population faster than economic opportunity, and expect normalcy in any economic equilibrium.
Federal Government on Tuesday disclosed that it has spent N7.09 trillion as at the end of the third quarter of 2020 fiscal year, just as it 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.
Minister of Finance, Budget and National Planning, Dr Zainab Ahmed disclosed this while presenting the overview of the 2020 fiscal outcomes and budget implementation/2021 budget defence to the House Committee on Finance, chaired by Hon. James Faleke.
According to documents presented to the Committee, as at the end of Q3 2020, Federal Government’s revenue available for budget funding (excluding GOEs) was N2.83 trillion, 70% of target. Federal Government share of oil revenues was N1.203 trillion (representing 158% performance, over and above the prorated sum in the revised 2020 budget) while non-oil tax revenues totalled N927.47 billion (76% of revised target).
Yet, VAT increase may not be the most fearful. The biggest fear remains and I hope it never happens: a potential Central Bank of Nigeria mandate that all monies in dorm accounts be converted into naira. From all angles, if the government cannot find money to fund bureaucracy, do not think anything is off limits.
These guys have mismanaged Nigeria since 1999 – and that is unfortunate. Who runs a company like Nigeria? You keep creating new boards, institutions, etc when you are complaining that you have no money? When will Nigeria get the right size of suits from our tailors?
My position remains: drastically reduce the cost of government; we may not even need the House of Representatives. Collapse federal universities so that each geopolitical region will have 3 with other current universities as campuses tied to any of the three. Close those agencies like NIGCOMSAT, NARSDA, NACETEM, etc because they will never deliver anything of value. Invest massively in primary and secondary education, and remove subsidies in university education. Etc, Etc.
Update: after Tribune ran the piece, the government posted this tweet. Of course, everything is first denied before it becomes the new normal. So, the tweet changes nothing.
FEC APPROVES FINANCE BILL 2020, NO INCREASE IN TAXES
2020 Finance Bill, critical to the implementation of the 2021 Budget has been approved by the Federal Executive Council presided over by President @MBuhari. The bill will soon be transmitted to @nassnigeria for consideration pic.twitter.com/kx19rIR3uD
— Ministry of Finance, Budget and National Planning (@FinMinNigeria) November 18, 2020