The Trade Union Congress (TUC) in Nigeria has strongly opposed the Federal Government’s plan to increase Value Added Tax (VAT) from the current 7.5% to 10%, 12.5%, and eventually 15%, as outlined in a proposed tax reform bill.
In a statement on Tuesday, January 21, 2025, TUC President Festus Osifo warned that a VAT hike would place an additional financial burden on Nigerians already grappling with inflation, unemployment, and the rising cost of living.
“At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power,” Osifo stated.
The union also highlighted the critical roles played by the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFUND), emphasizing their contributions to education and technological advancements. It urged the government to ensure their continued existence to sustain national development.
Additionally, the TUC welcomed the inclusion of a derivation component in VAT distribution, which it said would encourage economic productivity at the sub-national level. However, the union proposed two key adjustments to the tax reform bill:
- Higher Tax Exemption Threshold: The TUC recommended increasing the tax exemption threshold from ₦800,000 per annum to ₦2,500,000, arguing that this would ease financial pressure on low-income earners and boost their disposable income.
- Royalty Collection Review: It expressed concerns over assigning royalty collection to the Nigeria Revenue Service (NRS), warning that it could lead to significant revenue losses.
The union urged the government to reconsider the VAT hike, emphasizing the need to balance revenue generation with economic stability and citizens’ well-being.
