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VAT Increase: How Fair?

Published

7 years ago

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On Tuesday, March 19, 2019, the then Minister for Budget and National Planning, Senator Udoma Udo Udoma, and the Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, hinted the National Assembly that the Value Added Tax (VAT) rate is likely to go up.
Their statement was later corroborated in July, as the Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMFAC), Engr. Elias Mbam, added his voice to the demand for an increment in VAT from 5 per cent to about 7.5 per cent to shore up Nigeria’s revenue base which he said is heavily reliant on oil earnings.
The message became clearer on September 11, when the the current Minister of Finance, Budget and National Planning, Zainab Ahmed, spoke on the proposed plan to increse VAT at the end of the Federal Executive Council meeting. She said: “We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed to increase the VAT rate from five percent to 7.2 percent”.
For the trio; Udoma, Fowler and Zainab, an increase in VAT is not just needed to shore up Nigeria’s revenue base as posited by Engr Mbam, it is necessary to enable government fund the new minimum wage of N30,000 per month approved by the National Assembly.
While the Senate Committee on Finance awaits the details on reasons for the proposed increase by the finance minister and chairman, FIRS, the move had generated mixed reactions among the public on its possible effects on living standards and the economy.
Ordinarily, increasing VAT by the government of the day shouldn’t warant the magnitude of reaction as witnessed in this case. After all, such could still serve as a veritable means of meeting the expansive fiscal expenditure needs of the federal government. Besides, the World Bank recently noted that fiscal deficits in Nigeria will likely widen further due to increased pre-election spending and sustained revenue shortfalls.
But while the need for government to bridge its revenue gap remains incontestable, and while it also reserves the right to adopt any legitimate measure in its revenue generation drive, VAT increment inclusive, the writer is rather worried about the time the VAT increase measure is deemed apt for such purpose.
If Udoma, Fowler, and Zainab’s reason for the planned increment is anything to go by, then there is need for more innovative approaches to scaling up the government’s revenue capacities so as to meet its growing funding commitments, especially, against the background of increasingly financing its fiscal deficit from borrowings.
Let us not forget that there are expectations that the increase in minimum wage could possibly be eroded by price increases of key household items, offsetting the expected improvement in purchasing power. And for the Nigerian industrial climate, you can guess what hope this portends for foreign investments and the faith of the Small and Medium Enterprises (SMEs).
I hope the government’s enamoured pursuit of increasing revenue should not be to the detriment of the wellbeing of its own citizens as the choice of VAT increase upon the prevailing economic realities could be interpreted to be.
CSL Stockbrokers confirmed the above fears when it declared that “financing the increment in the wage burden through tax increment would force companies to raise prices significantly, ultimately placing the incidence of the tax increment on the consumers. It is, therefore, considered a bad timing and inconsistent with current economic reality”.
VAT, as we know, is basically imposed on consumption. Apart from the already diminished scale of consumption in the Nigerian economy which invariably may affect the collection performance of VAT, a simple economic analysis would attest that any increase in VAT at this time, would disproportionately affect poor people. But even beyond that argument, the biggest challenge is that any increase in indirect taxes affects the prices of goods and services.
This, analysts argued, could in turn affect the country’s inflation rate. With an inflation rate of over 11 per cent, the outcome of the proposed VAT increase is very critical given that the Central Bank of Nigeria is keen to contain inflationary pressures in the economy and bring inflation back to a single digit within a target range of 6-9 percent. It is thus expected that the rise in VAT would likely lead to a rise in inflation.
Moreso, in a clime like ours where the poverty level of the general populace has eroded their economic power, VAT increase may further worsen the living conditions of consumers whose real income has been stifled over the years. According to a recent report, “one striking feature in the performance of consumer goods companies over the past 18 months, is the consistent decline in reported revenue, suggesting that consumer demand remains weak.”
Well-meaning Nigerians have said “the consequence of this hike on the lives of Nigerians that are already suffering horrendous deprivations is dire and so, capable of exacerbating the poverty that has ravaged the people” .
The writer is of the view that at a time like this, when Nigerian workers expect an upward review in their monthly remuneration, in order to be economically repositioned, a planned corresponding increase in the prices of consumer goods by the government does not portray the government as one with the intention of making positive impacts on the lives of its citizens.
By this proposal, I am afraid the government risks being interpreted as one that does not realise the depth of misery that pervades our nation and may have probably completely detached itself from the people it ought to succour; a reason, I guess, the organised labour described this planned increase as anti-people and anti-development.
The reality is that any increase in VAT will be counter-intuitive to the goals of reducing poverty and inequality given the existing high economic disparity in the country.
In fairness to all, the proposed increase in VAT, by the federal government will not only weaken the citizens’ purchasing power, but would also worsen the poverty level in the country.
I, therefore, see this obvious call on the manufacturers and stake holders in the chain of distribution to hike the cost of their merchandise to the detriment of the suffering masses, as a concept billed for still birth.

 

Sylvia ThankGod-Amadi

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Opinion

Monthly Environmental Sanitation Imperative 

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1 week ago

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May 18, 2026

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Quote: “A clean environment is not a government gift; it is a civic duty that protects our health, preserves our cities, and reflects our national character.”
For many Nigerians who grew up in the 1980s, 1990s, and early 2000s, the last Saturday of every month followed a familiar pattern. Roads were deserted, markets closed, and residents swept compounds, cleared gutters, cut overgrown weeds, and disposed off refuse. The monthly environmental sanitation exercise became a national ritual that promoted cleanliness, discipline, and civic responsibility. As an environment correspondent about two decades ago, I joined officials of the Rivers State Ministry of Environment on sanitation monitoring tours across Port Harcourt and surrounding communities. Although enforcement officers were sometimes accused of excesses, the exercise succeeded in creating public awareness about the importance of keeping our surroundings clean. Over time, however, the practice faded away in many states.
In its absence, indiscriminate dumping of refuse, blocked drainages and environmental neglect became increasingly common. Today, heaps of waste line roads, markets and motor parks, while gutters clogged with plastics contribute to perennial flooding. Given the mounting environmental challenges facing Nigerian cities, there is no better time to revive environmental sanitation. Its return is no longer a matter of nostalgia; it is a practical necessity for public health, environmental safety, and sustainable development. Poor sanitation remains a major cause of disease. Stagnant water and uncollected waste create breeding grounds for mosquitoes, flies and rodents, increasing the risk of malaria, cholera, typhoid and other infections. Floodwaters contaminated by refuse also expose communities to serious health hazards.
Rapid urbanisation has worsened the situation. Cities such as Lagos, Port Harcourt and Abuja are expanding faster than their waste management systems can cope. As populations grow, so does the volume of waste generated daily. Monthly sanitation exercises can help rebuild environmental consciousness. Beyond cleaning streets, they remind citizens that environmental cleanliness is a shared responsibility. They also offer an opportunity to educate children and young people about hygiene, public health and community participation. Critics argue that the old sanitation policy restricted movement and was sometimes abused by security personnel. Those concerns were valid, but they do not invalidate the concept itself. Rather than abandon it, governments should reform the programme to make it more humane, participatory and transparent.
That is why the recent decision by the Lagos State Government to reintroduce monthly sanitation deserves commendation. Even if participation is largely voluntary, the move sends a strong signal that environmental responsibility must be taken seriously. Other states should emulate this initiative. In Rivers State, the Rivers State Waste Management Agency has intensified efforts to improve waste collection and restore Port Harcourt’s reputation as the Garden City. Reintroducing monthly sanitation would complement these efforts and deepen public involvement. At the federal level, policies such as the Digital Waste Marketplace, the Plastic Waste Policy and the National Waste Management Network are commendable. However, environmental sanitation remains one of the most direct and visible ways to mobilise citizens toward cleaner communities.
The exercise, however, must be supported by efficient waste management infrastructure. Citizens cannot be expected to maintain clean surroundings if there are inadequate waste bins, irregular refuse collection, and limited recycling facilities. Governments at all levels should invest in modern waste management systems, properly fund sanitation agencies, and promote recycling programmes. Waste sorting should become standard practice to reduce the volume of refuse ending up in landfills and drainage channels. Countries such as Singapore, Sweden and South Korea have demonstrated that waste can become a valuable economic resource. Recycling industries in these countries create jobs while protecting the environment. Nigeria can adopt similar strategies and turn waste into wealth.
Environmental laws must also be enforced consistently. Regulations against illegal dumping exist in many states but are rarely implemented. Offenders should face penalties, but enforcement must be fair and free from extortion. Urban planning is another critical factor. Poor drainage systems, overcrowding and inadequate sewage infrastructure worsen sanitation problems. Governments must prioritise road construction, drainage maintenance and orderly urban development. Markets deserve particular attention. They generate enormous quantities of waste every day, yet many lack organised disposal systems. Local councils and market associations should work together to establish effective waste collection arrangements in commercial centres. Religious institutions, schools, traditional rulers and civil society groups also have important roles to play.
Environmental responsibility should be taught and reinforced as a social value. Community leaders can help change attitudes by consistently promoting cleaner habits. This issue is even more urgent in an era of climate change. Flooding, erosion and extreme weather events are already threatening many Nigerian communities. Poor waste disposal worsens these challenges by blocking waterways and reducing urban resilience. A clean environment also offers economic benefits. Well-maintained cities attract investors, tourists and businesses. Reduced disease outbreaks lower healthcare costs and improve productivity among workers and students. More importantly, cleanliness reflects national values. A nation that allows public spaces to deteriorate projects an image of disorder and neglect. Nigerians deserve cleaner streets, healthier neighbourhoods and safer communities.
Reviving environmental sanitation will not solve all environmental problems overnight, but it can serve as a powerful starting point. Combined with effective waste management, public education and stronger infrastructure, it can restore environmental consciousness across the country. Ultimately, environmental cleanliness is a shared responsibility. Government must provide leadership, infrastructure and enforcement, while citizens must demonstrate discipline and civic commitment. From disposing of household waste properly to keeping drains free of obstruction, every Nigerian has a role to play. If Nigeria is serious about protecting public health, reducing flooding and building livable cities, the return of monthly environmental sanitation is a step whose time has come.
By: Calista Ezeaku
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Opinion

God’s Intentionality in Ecological System

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1 week ago

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May 18, 2026

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Quote:”Every component of creation is interdependent, demonstrating that God designed nature as a balanced system in which each part contributes to the wellbeing of the whole”.
 
From the very first chapter of Scripture, the Bible presents a profound truth: creation was not accidental, random, or without meaning. The universe emerged from the deliberate counsel of an all-wise God who fashioned every aspect of life with purpose and precision. The heavens were stretched out by His command, the earth was carefully positioned, the seas were bounded, and every living creature was assigned a distinct role within a perfectly coordinated ecological system. When God surveyed His completed work, He pronounced it “very good,” affirming that creation was whole, harmonious, and exactly as He intended. The natural world remains a visible testimony to God’s intentionality. The sun provides warmth and energy at the right intensity to sustain life. The moon governs tides and seasons. Trees absorb carbon dioxide and release oxygen.
Rivers irrigate the land and quench thirst. Bees and butterflies pollinate crops. Birds disperse seeds. Animals maintain biodiversity. Every component of creation is interdependent, demonstrating that God designed nature as a balanced system in which each part contributes to the wellbeing of the whole. Nothing was made without significance, and nothing was left to chance. Among all created beings, humanity occupies a unique and privileged position. Unlike plants and animals, man was created in the image and likeness of God. This divine imprint endowed human beings with intelligence, moral consciousness, creativity, and the capacity for relationship with their maker. It also established mankind as the steward of creation. God granted humanity dominion over the earth, not as a license for reckless exploitation, but as a sacred trust to cultivate, protect, and preserve the world He had declared good.
Dominion, in God’s original intention, was to be exercised with wisdom, compassion, and responsibility. Human beings were meant to care for the land, use natural resources judiciously, and ensure that all forms of life flourished in accordance with divine order. The earth was to be managed as a trust from God, not plundered for selfish gain. Unfortunately, this divine mandate has been grossly misunderstood and widely abused. It is deeply regrettable that man has deviated so drastically from God’s original intention. Instead of stewardship, humanity has too often embraced greed. Instead of preservation, there has been exploitation. Instead of gratitude to the Creator, there has been reckless consumption and abuse of the environment. Across the world, forests are felled indiscriminately, rivers are contaminated, and fertile lands are stripped of their productivity.
 Species disappear as habitats are destroyed. Air pollution threatens public health, and climate change disrupts weather patterns and livelihoods. What God created as a life-supporting ecosystem is increasingly treated as a disposable commodity. In Nigeria, the consequences are especially painful. Oil spills in the Niger Delta have devastated farmlands, poisoned rivers, and destroyed fishing communities. Poor waste management clogs drains and contributes to flooding. Erosion eats away homes and roads. Illegal mining and logging scar the landscape. In many cases, communities suffer while those responsible evade justice. At the root of much of this destruction is corruption. Funds earmarked for environmental protection, sanitation, and erosion control are often diverted for personal enrichment. Regulatory agencies are compromised through bribery.
 Powerful individuals and corporations place profit above human welfare. Corruption thus becomes not only a moral failure but an assault on God’s creation. This environmental abuse is also a tragic expression of man’s inhumanity to man. When water is polluted, children fall sick. When farmlands are destroyed, farmers lose their means of survival. When rivers are contaminated, fishermen are plunged into poverty. When floods and erosion displace families, communities are torn apart. The burden of environmental degradation falls most heavily on the poor and vulnerable, while future generations inherit a diminished world. Yet, despite humanity’s failures, there remains hope for restoration. God’s purpose for creation has not changed. He still calls His people to responsible stewardship and righteous living. When individuals and nations return to God’s principles, they begin to view the earth not as an object to exploit, but as a sacred trust to preserve.
Responsible stewardship means protecting natural resources, planting trees, reducing pollution, disposing of waste properly, enforcing environmental laws, rejecting corruption, and treating others with justice and compassion. It requires governments to act with integrity, businesses to operate ethically, faith communities to teach creation care, and citizens to take personal responsibility for the environment. Creation care is therefore more than an environmental concern; it is a spiritual obligation. Our treatment of the earth and of one another reflects the sincerity of our reverence for God. To exploit nature, oppress the vulnerable, and enrich ourselves through corruption is to rebel against His purpose. To protect creation and uphold justice is to honor the Creator and participate in His original design. The world God made was declared “very good.” It is our solemn duty to ensure that our actions preserve rather than destroy that goodness.
By: Sylvia ThankGod-Amadi
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Opinion

Confronting National Development In Chinese Style

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2 weeks ago

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May 13, 2026

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Quote: “China’s rise was not a miracle. It was the result of deliberate planning, disciplined execution, and a national determination to make poverty reduction the foundation of national development.”
A short TikTok video by @ancientchinaforever recently offered a compelling summary of China’s remarkable transformation from one of the world’s poorest nations to a global economic powerhouse. In just a few minutes, it captured a lesson that developing countries like Nigeria cannot afford to ignore: meaningful development does not happen by chance. It is the product of vision, consistency, and a deliberate commitment to confronting poverty. In 1981, according to the World Bank, nearly 88 percent of China’s population lived in extreme poverty. The country was overwhelmingly rural, industrially weak, and lacking in modern infrastructure. Millions of people had limited access to quality healthcare, education, and basic social services. Yet China refused to accept poverty as its destiny. Its leaders made a strategic decision to treat poverty reduction as the starting point of national development.
 Rather than relying on slogans or isolated welfare programmes, they created a coordinated system that mobilised government institutions at every level toward one overriding goal: improving the living conditions of ordinary citizens.
This was the turning point in China’s history. Poverty alleviation became a national mission. Clear targets were established, responsibilities were assigned to provincial and local governments, and officials were evaluated based on measurable results. Data was used to identify poor households, monitor progress, and adjust strategies where necessary.In effect, China built what may be described as a national development machine.The first major reforms focused on agriculture. Through the household responsibility system, farmers were given greater control over their land and allowed to sell surplus produce after meeting government quotas.
 This policy created incentives for productivity and innovation. The results were dramatic. Agricultural output rose significantly, rural incomes increased, and millions were lifted out of poverty.With food security improving, China turned to industrialisation. The government established Special Economic Zones, most notably in Shenzhen, to attract foreign investment and promote export-driven manufacturing. What was once a small fishing community quickly transformed into one of the world’s leading industrial and technology hubs. Factories created millions of jobs, drawing workers from rural areas into expanding urban centres. China soon became the manufacturing capital of the world, producing electronics, textiles, machinery, and consumer goods for global markets.The revenue generated from industrial growth was reinvested in infrastructure and human development.
China understood that development requires more than factories. It demands modern infrastructure that connects people, goods, and markets. Massive investments were made in roads, railways, airports, seaports, electricity, and telecommunications.
Today, China’s high-speed rail system, modern cities, and efficient logistics networks stand as visible proof of decades of purposeful investment. Equally important was China’s commitment to education and healthcare.Schools were expanded, literacy improved, and vocational training equipped workers with the skills needed in a modern economy. Healthcare reforms reduced preventable diseases and protected families from being pushed deeper into poverty by medical costs.These investments ensured that economic growth translated into tangible improvements in living standards.
Another defining feature of China’s development model was policy continuity. Through successive Five-Year Plans, national priorities were clearly outlined and pursued over decades. While leaders changed, the core development agenda remained consistent. This stability encouraged investment, strengthened institutions, and allowed long-term projects to be completed. Unlike countries where each administration abandons the policies of its predecessor, China sustained a clear sense of direction.The results have been extraordinary. According to the World Bank, China has lifted more than 800 million people out of extreme poverty—the largest poverty reduction effort in human history. A broad middle class has emerged, and the country has become the world’s second-largest economy. Chinese companies such as Huawei Technologies and Alibaba Group now compete at the forefront of global innovation.
China’s journey has not been without challenges. Rapid industrialisation has contributed to environmental degradation, regional disparities, and demographic pressures. However, these challenges do not diminish the scale of its achievement. They underscore the complexity of transforming a nation of over one billion people. For Nigeria, China’s experience offers valuable lessons. First, poverty reduction must be treated as a strategic national priority rather than a campaign promise. Second, development requires long-term planning and policy continuity. Third, sustained investment in agriculture, infrastructure, education, and healthcare is essential. Fourth, institutions must be strengthened to ensure accountability and measurable outcomes. Finally, leadership must combine vision with disciplined execution. Nigeria is richly endowed with natural resources, entrepreneurial talent, and a youthful population.
What remains missing is a coherent and consistent development strategy that places national interest above politics. China’s transformation demonstrates that development is not a matter of luck. It is the outcome of clear priorities, effective institutions, and unwavering commitment. For countries still grappling with poverty and underdevelopment, China stands as compelling proof that when a nation confronts its challenges with strategic intent and collective discipline, extraordinary progress is possible.
 Sylvia ThankGod-Amadi
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