FG Hikes VAT on Luxury Goods, Okays New Tax Regime
By Modupe Gbadeyanka
Federal Government has introduced a new tax regime in a bid to grow its revenue base so as to reflate dwindling economy.
At the Federal Executive Council (FEC) held on Wednesday in Abuja, which was presided over by the Acting President, Mr Yemi Osinbajo, the FG said that the Value Added Tax (VAT) on luxury goods will go up, while for basic goods will remain unchanged.
However, Minister of Finance, Mrs Kemi Adeosun, said the National Assembly will decide the rate.”
Briefing newsmen yesterday, the Minister pointed out that VAT on luxury goods must increase because in the United Kingdom, 20 percent is paid for such.
“What the committee has shown is that we should look at actually increasing VAT on some luxury items.
“At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more.
“Champagne in the UK attracts VAT of 20 per cent, so why should it be five per cent in Nigeria?
“So, they have made recommendations that we should identify some luxury items and increase VAT on those items immediately.
“And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about to see how we can implement it.
“But as far as basic goods are concerned, there will be no increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. But the National Assembly will decide the rate,” she said.
Mrs Adeosun revealed that the executive will work with the National Assembly on the revised National Tax Policy before its implementation.