The Trade Union Congress of Nigeria has opposed the proposed increase in the Value Added Tax rate, as outlined in the Federal Government’s Tax Reform Bills, warning that the move could worsen the economic hardship faced by Nigerians.
The Federal Government’s proposal to increase the Value Added Tax (VAT) rate from 7.5% to 10%, and subsequently to 12.5% and 15%, has been met with strong opposition from the Trade Union Congress which described the move as poorly timed and harmful to citizens already burdened by economic difficulties.
TUC expressed strong opposition to the Federal Government’s proposed hike in the Value Added Tax rate, as detailed in the Tax Reform Bills, cautioning that the measure could intensify the economic struggles currently affecting Nigerians.
During a press briefing in Abuja on Tuesday, following the union’s National Executive Council meeting held on November 26, 2024, TUC President Festus Osifo emphasized the importance of maintaining the current VAT rate.
He noted that increasing it would exacerbate the financial challenges faced by households and businesses amid inflation and rising living costs.
“Allowing the Value Added Tax rate to remain at 7.5 per cent is in the best interest of the nation. Increasing it now would impose an additional burden on households and businesses already struggling with economic challenges,” Osifo said.
He further warned that raising VAT at this time could negatively impact consumer purchasing power and hinder economic growth, stating, “With inflation, unemployment, and the cost of living on the rise, higher taxes could stifle economic growth and erode consumer purchasing power.”
To ease the financial burden on low-income earners, the TUC proposed a review of the tax exemption threshold. The union suggested increasing it from the current N800,000 to N2.5 million annually.
“This measure would increase disposable income, stimulate economic activity, and provide relief to struggling Nigerians,” Osifo explained. He added, “The threshold for tax exemptions should be increased to N2,500,000 per annum. This adjustment would offer much-needed relief to low-income earners, enabling them to cope with the current economic challenges.”
The TUC also raised concerns about plans to transfer the collection of royalties from the Nigerian Upstream Petroleum Regulatory Commission to the Nigeria Revenue Service.
The union argued that such a shift could result in inefficiencies and revenue losses due to the NRS’s lack of technical expertise in oil and gas operations.
“Royalty determination and reconciliation require specialised technical expertise in oil and gas operations, which the NUPRC possesses but the NRS lacks. This shift could result in inaccurate assessments, enforcement challenges, and reduced investor confidence,” Osifo warned.
On a positive note, the union applauded the government for retaining key institutions such as the Tertiary Education Trust Fund and the National Agency for Science and Engineering Infrastructure, praising their critical roles in advancing education and technology in Nigeria.
“These institutions have significantly contributed to improving tertiary education and fostering homegrown technologies. Their continued existence is vital for sustained progress in education, technology, and national development,” Osifo said.
The TUC urged the Federal Government to prioritize citizen welfare when crafting tax policies and to adopt reforms that promote equitable economic growth.
“As discussions on the Tax Reform Bill continue, it is our hope that the focus will remain on fostering economic growth and improving living conditions for all Nigerians,” he stated.
Reiterating its dedication to championing policies that benefit Nigerians, the TUC emphasized that true leadership involves implementing reforms that are proactive and people-centered.
