The Federal Executive Council (FEC) on Wednesday approved a new tax policy, which is expected to increase taxes on luxury goods such as Champagne.
Speaking about the new tax policy, Nigeria’s Minister of Finance, Mrs. Kemi Adeosun, confirmed that increasing taxes on luxury goods is one of the recommendations of the nine person committee that was inaugurated in August, 2016 to review and update the existing tax policy document in Nigeria.
“We should actually look at increasing VAT on some luxury items. VAT at 5%, we have one of the lowest tax rates in the world. Whilst we do not think VAT should be increased on basic items, if you want to drink champagne in the UK, VAT is 20%, why should it be 5% in Nigeria?”, she said.
The Minister also noted that plans are in place to work with the National Assembly for the amendment of the tax laws before the policies become laws.
“What we intend to do is interface with the National Assembly for those amendments the committee has brought up that need to be made, to get those amendments to the laws passed”
The federal government also set up an Inter-Ministerial Taskforce to look at factors causing the rising prices of food products across the country.
Addressing the high prices of food, the Minister stated that “Nigeria just by background has one of the lowest tax to GDP ratio in the world. We have 6%, Ghana has 15%, South Africa about 26%. Most developed countries have 30%. None payment of tax is one of the big factors in our economic condition. It is part of the reason states are unable to pay salaries because people are simply not paying taxes or are able to avoid [it].”