President Bola Tinubu
Between October 2023 and March 2024, the government’s revenue from Value Added Tax (VAT) rose by 58%, according to an investigation.
This information is based on financial reports from the Federation Account Allocation Committee (FAAC) during the specified period.
In a statement on November 22, 2023, from the Ministry of Finance’s Director of Press and Public Relations, Stephen Kilebi, FAAC noted it distributed N906.96 billion across the three levels of government for October 2023. The total included N347.343 billion in VAT, a N43.793 billion increase from the N303.550 billion allocated the month prior.
FAAC stated that the gross VAT revenue for October 2023 was N347.343 billion, an increase from the N303.550 billion distributed in September 2023.
The VAT total from November was N335.656 billion, which was less than October’s, but VAT revenue gradually climbed between December 2023 and March 2024. The VAT revenue stood at N458.622 billion in December 2023, N420.733 billion in January 2024, and N428.80 billion in February 2024.
On April 19, 2024, the Ministry of Finance’s Director of Information and Public Relations, Mohammed Manga, stated FAAC reported a gross VAT revenue of N549.698 billion for March 2024, which was N89.210 billion higher than the previous month.
FAAC attributed the VAT increase to economic growth and better tax compliance, resulting in a 58% rise from the N347.343 billion in October 2023 to N549.698 billion in March 2024.
The Federal Competition and Consumer Protection Commission (FCCPC) on April 19, 2024, linked the rising cost of goods in the country to multiple taxations and transportation costs. This conclusion came after an investigation into the persistent increase in goods prices nationwide.
The FCCPC Director of Surveillance and Investigation, Mrs. B. Adeyinka, mentioned their market surveillance at Masaka Markets in Nasarawa State last week, where sellers confirmed multiple layers of taxation and transportation costs as drivers of price increases.
The government indicated in October last year that it might raise the VAT rate from 7.5% to possibly 15%, following the International Monetary Fund’s advice. However, the government decided against raising VAT rates in the short term, opting to improve VAT coverage and collection efficiency.
Dr. Muda Yusuf, former chairman of the Lagos Chamber of Commerce and Industry, stated the increased VAT revenue is closely connected to rising goods prices across the country.
“Since VAT is a percentage of the prices, a price increase leads to higher VAT proceeds. For instance, if an item’s price doubles, VAT proceeds will double as well,” Yusuf said. This correlation between increasing goods prices and VAT revenue is consistent across various taxable products.
“Remember that all imports are subject to VAT. With the current high cost of imports, VAT on these goods has also risen.
In an ideal scenario, without a drop in sales volume, VAT revenue would have nearly doubled.
However, the increase in prices has caused a drop in sales volume, which is why we’re not seeing an even higher percentage increase. Despite this, there is a clear correlation between the rise in prices and the increase in VAT revenue
“Remember that all imports are subject to VAT. With the current high cost of imports, VAT on these goods has also risen.
In an ideal scenario, without a drop in sales volume, VAT revenue would have nearly doubled.
