President Bolu Ahmed Tinubu’s tax panel proposes the removal of VAT on food, education, and healthcare. Based on the recent cybersecurity tax levy placed on Nigerians.
On Wednesday, May 8, 2024, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, via his X handle, mentioned that his committee will propose removing the Value-Added Tax on essential items such as food, educational, and healthcare items to relieve Nigerians and help them save more from the little they earn.
This statement clarifies various thoughts and tweets in the comment section from a policy exposure and impact assessment session organized by the committee.
Debunking a recent tweet of Oyedele proposing additional VAT tax, Oyedele revealed that his committee had instead suggested “Full input VAT credit for businesses to reduce their cost of doing business and minimize the strain on their cash flows. Remove VAT on an expanded list of basic food, educational, and healthcare items to protect people experiencing poverty. Harmonize all consumption taxes into one (VAT only) and adjust the revenue-sharing formula to address a diversity of taxes favouring states.”
Removing VAT on export services and intellectual property will enhance and promote non-oil exports. It will also heighten the threshold for exempting small businesses and enhance the VAT return process to reduce the strain on businesses’ working capital.
He further stated that the tax panel’s proposal aims to streamline the tax system to ease businesses and make it friendly for the government to administer. Considering the 7.5 per cent VAT rate, the proposal includes reducing companies’ income tax rates and increasing the personal income tax exemption threshold.
He concludes by saying, “Nigeria’s VAT system places a huge burden on businesses as they cannot claim the input VAT incurred on services and assets. Some items which constitute basic consumptions (food, education, and healthcare) are liable to VAT rather than being exempt or zero-rated.”
