The Formal Deputy Central Bank Governor and a presidential candidate in the 2019 general elections Mr. Kingsley Moghalu has reacted over the increase on the Value Added Tax as introduced by the Nigerian Government.
Moghalu who revealed this using his Twitter handle, stated that with reduced purchasing power will come depressed profits for businesses.
If this bites deeply, more workers will be laid off, sparking another possible recessional cycle.
Plus inflationary implications when combined with (essential) new minimum wage. Many policy contradictions.
The Nigeria governments decision to raise the Value Added Tax from 5% to 7.5% is wrong.
It will be more damaging than the added revenues govt seeks.
Nigerians are poor, most have weak spending power; the impact of the recession is still strong and recovery has been weak.
A 50% VAT increase?Some will argue the WB loan is “concessional”. The revenue to debt service ratio nullifies that argument.
We need to first reposition the economy to be productive, and then expand the tax base on that basis.
Revenue generation can then be sustainable. Multiple taxes on a few, No.We spend 66% of our revenues servicing debt.
Combined with bloated government and massive recurrent expenditure, not much is left for development.
Another $2.5 billion loan from W’Bank that brings our debt burden to $83bn is a bad idea. He however also noted that the Buhari led administration is mortgaging the future of our youth while lacking political will for structural reforms,such as removing petrol subsidy, that will yield internal revenue.