President Muhammadu Buhari said Thursday that his administration has no intention of inflicting more suffering on Nigerians.
This is even as the leadership of the Trade Union Congress, TUC, told the President that the enthusiasm of workers on the signing into law of a new minimum wage was becoming a nightmare, following the delay in the implementation of payment of the new approved salary.
Buhari spoke on a day Nigeria Employers Consultative Association, NECA, and some financial experts faulted the proposed increase in Value Added Tax, VAT, to 7.2% from 5%, saying the increment would devalue the new minimum wage.
However, President Buhari speaking when the leadership of TUC paid him a visit at the Presidential Villa, Abuja, assured that rather than inflicting additional pains on Nigerians, his government would keep seeking ways of ameliorating their sufferings and create a more enabling environment for everyone to thrive.
“On fuel prices, I agree with you on the need to eliminate corruption and inefficiencies in the sector. I want to assure you that, as an administration, we have no intention of inflicting any additional hardship on Nigerians,” he said.
The President in a statement by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, said the Federal Government remained committed to the implementation of the national minimum wage, pointing out that the inaugural Federal Executive Council meeting held on Wednesday focused on the Medium-Term Expenditure Framework, MTEF, which included discussions around the new minimum wage.
He said: “During our first term, we secured the nation’s territorial integrity and continue to protect the lives and properties of our citizens. We introduced various economic stimulus packages that support businesses and traders at all levels, promoted backward integration programmes, especially in the agricultural sector to enhance our food security while creating jobs.
“We embarked on the most ambitious infrastructure development and rehabilitation projects this country has seen in decades. We also introduced the largest Social Investment Program in Sub-Saharan Africa.
“Although these programmes and many more successfully lifted Nigeria out of recession, the full impact is yet to be felt. In the next four years, we shall sustain this momentum and by the grace of God, lift millions of Nigerians out of poverty,”
President Buhari, who noted that his administration will work hard to improve the livelihood of the citizens, said most of the inherited challenges were avoidable, if some previous governments had been keener on investing in infrastructure and human capacity.
In his remarks, Comrade Quadri Olaleye, the President of TUC, advised the Federal Government to pay more attention on the welfare of Nigerians by avoiding increase in fuel price and ensuring implementation of the National Minimum Wage, which had been delayed by negotiations on the consequential adjustments.
“We are, however, disturbed that the enthusiasm is turning into a nightmare,’’ said Olaleye urged the President to focus on poverty reduction and improve security.
He assured the President that TUC will support the government as it tackles challenges facing the country, commending him for increase in Internally Generated Revenue, steps on the xenophobic attacks on Nigerians and signing of the African Continental Free Trade Agreement, AfTA.
Reacting to the propose increase in VAT Thursday, the Nigeria Employers’ Consultative Association, NECA, faulted it, saying such increment would devalue the N30, 000 new minimum wage.
It contended that the proposed increase in the VAT would reduce the purchasing power of the citizens, lead to increase in prices of goods and services, result in upward movement of inflationary rate and further contract the economy.
NECA in a statement signed by its Director General, Mr. Timothy Olawale, said: “Recently released data of the country’s GDP growth indicated a contraction in the past two quarters (Q4, 2018 (2.38%), Q1’2019 (2.10%), Q2, 2019 (1.94%)) and also International Monetary Fund (IMF) has recently revised downward its global economic growth forecast to 3.2% due to sluggishness in global economy. ”Therefore, this suggests that at such period in time, governments should be formulating fiscal measures/policies to stimulate their economies”.
“The benefits of the recently signed National Minimum Wage of N30,000 would be neutralized by the proposed increase in the VAT, further reduce the purchasing power of the citizens, leading to increase in prices of goods and services, resulting in upward movement of the inflation rate, and further contraction of the economy.”
On businesses, he lamented that “since the purchasing power of the citizens would have been reduced, sales of goods and services will reduce and inventories for business will be high and could lead to closure of businesses that ought to be supported by government in reducing unemployment rate that is currently alarming,
“In the event that government increase VAT against the will of the people, it should have been limited to luxury or ostentatious goods only. Government should double its efforts at expanding the tax net, reduce the income gap and improve the economy through more friendly fiscal policies and promote the ease of doing business in Nigeria.
”The Federal Government should further increase the tax bracket, widen the tax net as the country is currently achieving less than 10% of its VAT potentials.”
Concurring with NECA, some financial experts argued that Value Added Tax, VAT, increment by the Federal Government would further dampen purchasing power of Nigerians.
Former Director-General, the Securities and Exchange Commission, SEC, Dr. Suleyman Ndanusa, told NAN that the proposed VAT would affect demand for goods and services.
Ndanusa said that companies would suffer if people did not demand for goods and services because of VAT increment.
“If people do not demand for goods because of more tax burden, it will affect the companies that produce them. And if the companies that produce them are not making money, it will obviously affect their profitability and income,” he said.
Noting that the timing for the VAT increment was wrong, considering the challenges in the economy, Ndanusa said further: “The timing is quite wrong. At this point in time, our economy needs to be helped by policies that would ginger more consumption and more disposable income for masses and the people.
“The paradigm for me has to change, are we increasing tax just for purpose of revenue or managing our fiscal policy taxation for growth? The paradigm has shifted from revenue- driven taxation to growth-driven taxation.”
He said that “Nigeria should be thinking on what to do to create the genetic energy for our economy at this point in time, where we are growing at 2.5 per cent.”
Similarly, Mr Sola Oni, a chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, described it as a bad omen.
Oni said the proposed increment would obviously increase transaction cost and make Nigerian market more uncompetitive.
“High transaction cost is at variance with the global best practices. The policy is an overkill at a period when investors’ confidence in the market is still fragile. It is another way of deploying unpopular government’s policy to stifle our capital market. It is not too late to reverse the acerbic policy,” Oni said.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd, said VAT increase at this stage and state of the economy would further hamper consumption due to low purchasing power.
“Yes, it is true that government needs money to finance the budget, but timing is the issue here because the economy is still struggling,” Omordion said.
