The prices of goods and services may increase if plans by the Federal Inland Revenue Service (FIRS) to increase value-added taxes by 35% or 50% are approved.
Speaking on Tuesday when he appeared before the senate committee on finance in Abuja to give details of the 2019-2021 medium-term expenditure framework and fiscal strategy paper, Babatunde Fowler, FIRS chairman, said Nigerians should brace up for a VAT increase.
He said the impending VAT increase was one of the areas being looked at by FIRS to meet its 2019 revenue generation target of N8 trillion.
“By the end of this year, we should be ready for an increase in VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go on those trips. We should be ready for an increase in VAT,” he said.
“I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.”
In his remarks, Udoma Udo Udoma, the minister of budget and national planning, said the increase would be necessary to fund the minimum wage.
“The President supported a revision but it is important that as we are revising (the Minimum Wage), we make sure that it can be funded. That is why we set up the Bismark Rewane Technical Committee,” he said.
“So we will be coming to you. There may be some changes may be in VAT and other things. But we will be coming to you in order to make sure that we can fund the Minimum Wage.
“Not just fund the Minimum Wage but as you announce it, you now enter into negotiations with those above the Minimum Wage and we have to be prepared for that.”
He said implementation of the 2018 budget will continue until the 2019 budget is passed.
According to the minister, N1.226 trillion has been released for capital projects as of January 11.