The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has dismissed claims that the federal government plans to increase the Value-Added Tax (VAT) rate from 7.5 percent to 10 percent.
VAT, also known as a goods and services tax (GST) or general consumption tax (GCT), is a consumption-based tax applied to the value added at each stage of a product’s production and distribution.
The New Daily Prime reported that former Vice President Atiku Abubakar alleged on his X (formerly Twitter) page that President Bola Tinubu and his advisers had resolved to increase VAT from 7.5 percent to 10 percent.
Mr. Atiku criticized the purported plan, calling it inhumane, especially in light of the recent surge in petrol prices across the country. He argued that increasing VAT would exacerbate the economic challenges faced by average Nigerians.
However, Punch newspaper reported that Mr. Edun, in a statement on Monday, clarified that the government has not made any changes to the VAT rate. He confirmed that the rate remains at 7.5 percent, as mandated by the nation’s tax laws.
He emphasized that the 7.5 percent VAT rate continues to apply to all VAT-eligible goods and services.
“The current VAT rate is 7.5%, and this is what the government is charging on a spectrum of goods and services to which the tax is applicable. Therefore, neither the Federal Government nor any of its agencies will act contrary to what our laws stipulate,” said the minister.
The minister stressed the critical need for a balanced tax system, highlighting that Nigeria’s tax framework is anchored on three fundamental pillars: tax policy, tax laws, and tax administration.
“The tax system stands on a tripod: tax policy, tax laws, and tax administration. All three must combine well to provide a sound system that strengthens the government’s fiscal position. Our focus as a government is to use fiscal policy in a way that promotes sustainable economic growth, reduces poverty, and enables businesses to thrive,” he stated.
Mr. Edun reassured Nigerians that the government’s fiscal policies are carefully designed to foster sustainable economic growth and alleviate poverty, rather than hinder progress. He also highlighted new government initiatives aimed at easing the financial burden on citizens, particularly in relation to food imports.
“The reports and opinion pieces regarding VAT seem to wrongly convey the impression that the government aims to make life difficult for Nigerians. That is not correct. If anything, the Federal Government has demonstrated, through its policies, its commitment to creating a conducive environment for businesses to flourish.
“In fact, it is on record that the Federal Government, as part of efforts to bring relief to Nigerians and businesses, recently ordered the stoppage of import duties, tariffs, and taxes on rice, wheat, beans, and other food items,” Mr. Edun noted.
