Senator Udoma - minimum wage

Minimum Wage: FG Moves to Increase VAT, others

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The Federal Government is contemplating a 50% increase in Value Added Tax (VAT) to be able to pay the N30, 000 national minimum wage approved by the Senate on Tuesday, March 19.

After the passage, the Senate asked the federal government to send a supplementary budget that would cover the new wage structure for consideration.

But the Minister of Budget and National Planning, Senator Udoma Udo Udoma, and Chairman of the Federal Inland Revenue Service, Mr. Babatunde Fowler, disclosed that they will have to increase VAT to achieve this result when they appeared before the Senate Committee on Finance.

In his statement, Fowler said that the proposed payable VAT by Nigerians based on the increment would be between 35% (6.75%) and 50% (7.25%). But government is currently charging 5% VAT on all products in the country.

He said: “by the end of this year, we should be ready for an increase in the VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go for those trips. We should be ready for an increase on VAT”.

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“I can certainly see an increase in VAT of at least 35% to 50% this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.”

The Minister of National Planning told the Committee, headed by Senator John Owan-Enoh, that the Technical Advisory Committee on the minimum wage, would submit its report to President Muhammadu Buhari this week.

“It will be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the Minimum Wage. Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states; it is a tough time to review wages. But the N18, 000 is really too low and it is difficult for people to live on N18, 000”.

“The President supported a revision but it is important that as we are revising (the Minimum Wage), we make sure that it can be funded that is why we set up the Bismark Rewane Technical Committee. We will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the Minimum Wage”, he said.

“So it is something we are going to work closely with the Finance Committee on how best this Minimum Wage will be addressed, both from the Federal Government and the states to ensure that the whole government apparatus is not just paying salaries and nothing else”.

“It is important that we are able to pay the Minimum Wage and still have enough resources to do infrastructure. The Committee has virtually completed its work”, Udoma restated.

He added that the Federal Government would intensify efforts in its assets recovery drive and would also challenge revenue generation agencies like the FIRS and the Nigeria Customs Service to boost their operations.

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