No to 100% increase in VAT!

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Com Boboi Kagama, TUC President

by Baba Aye

Com Boboi Kagama, TUC PresidentThe Federal Inland Revenue Service (FIRS) is again threatening to increase the rate of Value Added Tax (VAT) from 5% to 10%. This is totally unacceptable! Socialist Worker welcomes and supports the position of the Trade Union Congress that says this proposal is “evil, satanic and lacking human face”.

Value Added Tax is a regressive tax because it places a greater tax burden on poor people. It is a flat rate paid whenever you buy commodities in the supermarket or other formal retail outlets. As a result, poor people tend to pay more VAT than rich people – this is contrary to one of the basic principles of progressive taxation that the rich should pay higher rates of taxation.

The Acting Executive Chair of the FIRS, Mr. Sunday Odugbesan claims that it is necessary to increase taxation. This is due to fall in the international price of crude oil and the resulting reduction in state revenue. We agree that there is need for greater taxation. But this extra tax should be paid by the rich and their corporations and not by working people.

Socialist Worker calls for progressive taxation with the Personal Income Tax of the rich increased significantly. The highest rate of income tax is now only 24%. This is much lower than previously in Nigeria and only half the current rate in Britain, for example. In addition, the annual tax allowance should be increased so that people do not pay tax unless they earn more than well over the minimum wage.

Corporate Income Tax (CIT) should also be increased. At independence CIT was 45%, it has gradually been reduced to 30%. So companies pay 15% less now, than they did 50 years back. Corporate Income Tax for the most profitable companies should rather be increased to 50%.

Tax evasion by corporations and bosses must also be curtailed. Currently, many local and multinational corporations do not pay up to what they actually should pay as taxes. They utilise different loopholes within the law (with the help of their accountants) or even totally side track the tax laws.

Meanwhile, the rich are the primary beneficiaries of the current economic system (capitalism). It is their greed and the logic of their exploitative system that has thrown poor Nigerians, and indeed other poor people across the world, into economic, social and environmental crises.

Mr. Babatunde Fowler, new FIRS bossWe, as poor working people must resist the attempt by the bosses to make us pay for their crises, as Mr. Babatunde Fowler whose antecedence in increasing poor working people’s tax burden in Lagos state, takes over as the new FIRS boss. We must all resoundingly say no to any increase in VAT. On the contrary, such regressive taxes as VAT should be scrapped. The trade unions must be ready to lead the working people to fight any attempt to increase the rate of VAT.

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