Atiku Abubakar Criticizes Proposed VAT Increase

Atiku Abubakar, former vice-president, has condemned the current administration’s plans to raise the value-added tax (VAT) from 7.5 percent to 10 percent.

In a social media post on Sunday, Atiku labeled the proposed increase as a “regressive and punitive policy.”

“President Bola Tinubu, along with his advisers, has decided to hike the VAT rate from 7.5% to 10%, coinciding with the NNPCL’s announcement of a significant rise in PMS prices at the pump,” he stated.

“This move signals the introduction of more regressive and punitive policies, which will undoubtedly worsen the ongoing cost-of-living crisis and further weaken Nigeria’s already fragile economic growth.

“Tinubu and his administration seem to be following a familiar pattern: imposing more burdens on the struggling masses while turning a blind eye to their own extravagance!

“Tinubu’s actions show a glaring disregard for the suffering of the less fortunate, as he indulges in lavish renovations of villas and the purchase of new jets and vehicles for himself and his family.

“It doesn’t take an economist to understand the dire consequences President Tinubu’s misguided policies will have on Nigeria’s future.”

Atiku highlighted that the continuous rise in taxes and interest rates has become “overly burdensome, stifling businesses of all sizes, causing job losses, and exacerbating the hardships faced by the poor.”

The former vice-president noted that since Tinubu’s assumption of office, the manufacturing sector has faced “constant challenges,” with its contribution to the gross domestic product (GDP) “dropping by over 20% since December 2023, according to NBS data.”

“In early August, Tinubu shifted his focus to agriculture. True to this administration’s approach, a new policy was quietly crafted and announced, allowing duty-free importation of agricultural commodities like wheat, maize, and paddy, despite strong opposition from farmers’ groups across the country,” he remarked.

“This policy poses a significant threat to Nigeria’s food security goals, as local farmers, unable to compete with low-cost producers from Asia, Europe, and America, are forced to scale back or cease their production efforts entirely.”

Atiku warned that the policy “endangers job creation, wealth generation, and the long-term prosperity of the sector, casting doubt on Nigeria’s sustainability and development.”

He urged President Tinubu and his advisers to focus on developing sustainable solutions to the systemic challenges facing the economy rather than implementing measures that will only create further instability.

On May 8, Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, stated the necessity of increasing the VAT rate.

Oyedele mentioned that the committee has proposed adjusting the VAT sharing formula since it is a state tax.

According to section 40 of the VAT Act, the federal government receives 15 percent of the tax revenue, states get 50 percent, and local governments receive the remaining 35 percent.

However, Oyedele noted that the committee is recommending a reduction in the federal government’s share from 15 percent to 10 percent.