The International Centre for Tax Research and Development (ICTRD) has advised the Federal Inland Revenue Service (FIRS) against its plan to collect and remit Value Added Tax (VAT) from traders, especially those in the informal sector, stating that it will certainly be an additional burden to the consumers.
Morenike Babington-Ashaye, President of ICTRD made the call in an exclusive interview with Daily Independent stating that if VAT is charged at the market place it will affect the disposal income of the citizens and the nation may be moving millions of Nigerians to the poverty lane.
“This is what any government should avoid at this time when there is so much hardship in the land. Also we have to be careful not to deprive the citizens of their basic needs.
Babington-Ashaye who is a former Chairman, the Ogun State Internal Revenue Service, said taking VAT to the marketplace can also cause unemployment because the cost of production in Nigeria is very high and Nigerian goods have not been able to compete favourably with the imported goods.
Advertisement
“Our prices are higher, manufacturers may decide to close their factories and begin to import, resulting in employees being laid off.
While speaking on implications on ordinary Nigerians, she said that the key issue is that the Market Traders Association of Nigeria (MATAN) members are retailers who by law cannot charge VAT since they will have not added value to the products they are selling.
“Also VAT is charged at source. So taking VAT to the marketplace will overturn the principles of VAT and anything charged at the marketplace will be illegal and a burden to the consumer. Such a charge can no longer be called VAT but Sales Tax. There is a provision in the Finance Act 2019, that any person having a turnover of less than 25 million is exempt from charging VAT.
“The Federal government must understand that taxation is not all about collecting taxes, it is about tax policy, tax law and administration. Tax administration is based on the tax law and FIRS cannot circumvent the law because the government wants to generate revenue,” she said.
Advertisement
Advertisement
