From Atiku Sarki, Abuja
The Trade Union Congress (TUC) has expressed deep concerns over the proposed increase in Value Added Tax (VAT) from the current 7.5% to 10%, and eventually to 12.5% and 15%, as outlined in the Tax Reform Bill introduced by the Federal Government.
The Congress also criticized the gradual defunding of TETFUND and NASENI and the proposed transfer of royalty collection in the oil and gas sector from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to the Nigeria Revenue Service (NRS).
In a statement issued in Abuja and signed by the TUC President, Comrade (Engr.) Festus Osifo, the Congress recalled its position during its National Executive Council (NEC) meeting on November 26, 2024, at the NAF Conference Centre in Abuja. It outlined key areas of disagreement, emphasizing that these proposed changes would have a detrimental impact on Nigerians and the economy.
The TUC applauded the resolution to retain VAT at 7.5% and maintain funding for TETFUND and NASENI, following discussions between state governors and Federal Government representatives.
“Allowing VAT to remain at 7.5% is in the best interest of the nation. Increasing it would impose additional financial burdens on Nigerians, many of whom are already struggling with rising inflation, unemployment, and living costs. A higher VAT rate would strain households and businesses, slow economic growth, and reduce consumer purchasing power,” the statement noted.
On the preservation of TETFUND and NASENI, the Congress emphasized their critical role in national development. “These institutions have significantly contributed to improving tertiary education and fostering homegrown technologies that enhance productivity and self-reliance.
Their continued operation is vital for sustaining progress in education, technology, and economic development across the country,” the TUC stated
The Congress also acknowledged the inclusion of a derivation component in VAT distribution among the three tiers of government. It noted that this provision, when implemented, would encourage productivity at the sub-national level, gradually shifting Nigeria from a rent-seeking economy to a derivation-based system that stimulates economic activity and fosters growth.
Despite these positive developments, the TUC urged further revisions to the Tax Reform Bill. It called for an increase in the tax exemption threshold from the proposed ₦800,000 per annum to ₦2.5 million per annum, arguing that this adjustment would provide significant relief to struggling Nigerians by increasing their disposable income and easing economic hardships.
The Congress also expressed strong reservations about transferring royalty collection from NUPRC to NRS, warning of potential revenue losses. “Royalty determination requires specialized technical expertise, which NUPRC possesses but NRS lacks.
This shift could lead to inaccuracies, increased compliance costs for industry players, and reduced investor confidence due to overlapping functions and inefficiencies. Retaining this function with NUPRC is crucial for effective revenue collection in the oil and gas sector,” the statement explained.
While commending the Federal Government for addressing some of its concerns, the TUC urged further consideration of its proposals, emphasizing that proactive measures would enhance the lives of Nigerians and promote equitable economic growth.
“The Trade Union Congress of Nigeria remains committed to advocating for policies that improve the lives of citizens, especially workers. As discussions on the Tax Reform Bill continue, we expect the focus to remain on sustainable economic growth and improved living conditions for all Nigerians,” the statement concluded.
