VAT Increase Will Worsen Poverty, Says Ex-Finance Minister

• Dr. Yerima Ngama opposed a VAT hike, urging the government to improve tax collection efficiency and widen the tax base

• He warned that raising VAT could worsen citizens’ financial struggles and reduce consumer spending amid ongoing economic difficulties

A former Minister of State for Finance, Dr. Yerima Ngama, has warned against increasing Value Added Tax (VAT) amid Nigeria’s current economic difficulties. He argued that raising VAT now would worsen the financial struggles of citizens already impacted by President Bola Tinubu’s fiscal reforms.

Dr. Ngama made this statement on Thursday during a Public Hearing on Tax Reform Bills. The event, organized by the House of Representatives Committee on Finance, took place at the National Assembly Complex in Abuja.

Speaking on behalf of the Arewa Consultative Forum (ACF), he rejected the proposed VAT hike, inheritance law, and the scrapping of agencies like TETFund, NASENI, and NITDA.

He criticized the VAT increase, calling it unfair to taxpayers. Instead of raising VAT, he urged the government to widen the tax base. He argued that despite increasing rates, collection efficiency remains a major issue.

“The focus should be on improving tax collection, not raising rates. If only 30% of taxes are collected, increasing VAT won’t help,” Ngama stated.

He recommended maintaining the current 7.5% VAT rate, citing its burden on businesses and individuals. While acknowledging the government’s revenue needs, he cautioned that higher VAT could reduce consumer spending and slow economic growth.

On VAT distribution, he suggested that the formula should be determined through political consensus rather than legislation.

“Not everything requires a law. Federal, state, and local governments should agree on VAT distribution through negotiations,” he explained.

Dr. Ngama also proposed limiting the authority of the National Revenue Service chairman. He noted that concentrating too much power in one individual could be counterproductive.

“The chairman already has too many responsibilities—appointing coordinating directors and chairing the NRS board. This is overwhelming,” he said.

Regarding the inheritance law, he urged the National Assembly to remove the section entirely and allow states and local governments to decide on the matter.

He praised President Tinubu for creating a livestock ministry and suggested setting a goal for the minister.

“The minister should aim to establish 40 world-class ranches nationwide by 2027,” he concluded.