7.5% VAT: Stop increase, collapse National Assembly, reduce cost of governance

 

• Chartered accountant advises Federal Government

 

BY JOEL OGBU

The Federal Government of Nigeria has been advised to cut down on the cost of governance to raise additional revenue instead of jerking up the Value Added Tax (VAT) rate to 7.5 per cent, as currently being proposed.

In a nine-point proposal, Mr. Adekunle Adewunmi, a fellow of Institute of Chartered Accountants of Nigeria (ICAN) said rather than subjecting Nigerians to additional burden of increased taxation, the Federal Government should reduce drastically the cost of governance and waste of resources and provide sufficient funds to finance increase in minimum wage and take care of other needs.

“Nigerian political leaders and elites must be ready and willing or compelled to make sacrifices. Poverty is prevalent in the land and government cannot tax poverty through VAT increase. It’s final consumers that suffer VAT and not producers or middlemen,” Adewunmi, also a tax consultant said.

Adewunmi who described his views on the VAT increase as “tailor-made for the peculiar perennial problems of Nigeria” advised the government to summon the political will to do the following:

1. Collapse the federal legislature (National Assembly) into one chamber of just three representatives from each state of the federation, including the FCT
2. Reduce the total emoluments of the National Assembly members by 70% and sitting to be on part time basis
3. Cancel foreign courses and medical treatments for public servants henceforth
4. Stop public servants from sending their children and wards to foreign educational institutions
5. Official vehicles of top civil and public servants should be reduced in quantity and Value. Maximum ceiling of N15 million should be the cost of official vehicle of top public servants below President and VP
6. Financial statements of NASS, State Assemblies, FMDAs and SMDAs should be audited annually by independent auditing firms and their reports made public
7. Due Process offices at all levels of government should be privatised and managed by Professionals
8. Office of Chief of Staff is foreign to Nigerian Constitution and should be abrogated. The offices of the SGF (Federal) and SSG (States) should handle relevant functions
9. Annual Budgets should be subject to review by Independent Financial Consultants for control purpose and reduction of incidence of padding before legislative appropriation

Adewunmi acknowledged that even though some of his nine-point proposal would require constitutional amendment to achieve, it was up to Nigerians to rise up and galvanise government into action.

Said he: “Yes, I agree that some of these will require constitutional amendments to realise, but Nigerians must rise to this occasion of a change in style of government and governance otherwise suffering of the majority of Nigerians will continue forever.”

The Federal Government had set up a committee earlier this year with a mandate to proffer advice on ways to realise alternative sources of raising funds for the implementation of the new minimum wage by the government.

The committee, headed by economist and managing director of Financial Derivatives Company Limited, Bismack Rewane, submitted its report on March 21 with the increase in VAT rate from five per cent to 7.5 per cent as one of its key recommendations to government to handle the issue.

The increase was earlier put at 7.2 per cent, but the Minister of Finance, Budget and National Planning, Zainab Ahmed, in a statement later put the figure at 7.5 per cent.