VAT Is Pro-Poor Policy – Fowler Insists
BY COBHAM NSA, ABUJA – Executive Chairman of the Federal Inland Revenue Service (FIRS), Tunde Fowler has maintained that Value Added Tax (VAT) is a pro-poor administrative policy meant for the overall well being of less-privileged Nigerians.
He said being a consumption tax, VAT was primarily designed to provide succour and support for ordinary Nigerians rather than create hardship as being insinuated in some quarters.
The FIRS boss, who allayed fears that any percentage hike in VAT may cause further hardship and economic dislocation for poor Nigerians, said such speculations were out of place because VAT is charged based on consumption and capacity of individuals to spend on ostentatious products and items
According to him; those who do not consume certain categories of goods and services are insulated from paying VAT, adding; “You are not liable to pay VAT charges on those items. VAT is not charged on all medical and pharmaceutical products. It is not charged on basic food items. It is not charged on books and educational materials. It is not charged on baby products, fertilizers, locally produced agricultural and veterinary medicine. VAT is not charged on farming machinery and farming transportation equipment.”
Fowler further explained that; “VAT is not charged on all exports, plant machinery and goods imported for use in Export Processing Zones and free trade zone: Provided that 100 percent production of such company is for export.
“Other services exempted from VAT are Medical services, Services rendered by Community Banks, People’s Bank and Mortgage Institutions, plays and performances conducted by Educational Institutions as part of learning and all exported services are exempted from VAT.”
The FIRS Chairman, who spoke in Lagos at the maiden edition of the Nigeria Tax Outlook (NTO) Stakeholders Round-table Series organised by Nigeria Taxpayer Hub, said revenue from VAT is channeled towards providing basic amenities in the society for the overall good of the masses.
“I was at a programme at the Senate. I was talking about projection in 2019 for the VAT. And I was asked a question about what my personal views were about the VAT and some people got it a bit wrong. Let me clarify some things.
“I understand that some people misunderstand what the VAT is. VAT is a consumption tax. If you don’t have money to purchase certain categories of goods and services and you don’t consume them, then VAT is not your problem. The VAT is used to assist the needy. VAT provides support for the needy, not a hardship on them. 85 percent of VAT collected is shared among states for them to provide free education, free health services, provide basic amenities among others.
“We can see what the Federal Government is doing with the tax money. Look at the rail system, the Abuja-Kaduna rail is complete. Look at the Lagos-Ibadan expressway, look at the education system, the school feeding program among others. If at the state level, your government cannot justify the taxes you pay to them, you have the right to vote them out in the next four years”, he said
