Nigerian government may increase VAT to fund minimum wage

By Edwin Akwueh, Abuja

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The Nigerian government has hinted that the value added tax (VAT) may be reviewed slightly upwards to enable it pay the newly approved national minimum wage.

Minister of Budget and National Planning, Senator Udoma Udo Udoma gave the hint on Tuesday during a budget 2019 interactive session with the Senate committee on finance.

Senator Udo Udoma confirmed that it may be difficult to fund the new national minimum wage, based on the current revenue status of the government, noting that only a review of the VAT could make the payment possible both at the state and Federal levels.

It would be recalled that the National Council of State had approved a new national minimum wage of N27,000 for the country which was later presented to the National Assembly by President Muhammadu Buhari.

However, the Lawmakers in both chambers have approved the sum of N30,000, with the latest approval coming from the Senate during its plenary on Tuesday March 19, 2019.

According to the Lawmakers, “Nigeria’s current economic realities make it imperative to have at least N30,000 as minimum wage for workers in the country.”

Senate’s approval of the N30,000 followed its consideration of the report of the ad-hoc committee on the new national minimum wage led by Senator Francis Alimeghena.

Although the Minister of National Planning did not give details of the planned review, he was consistent in his statement that the new minimum wage may not be feasible under the prevailing VAT rate.

In a chat with Voice of Nigeria’s Edwin Akwueh after the meeting with Senate committee on finance, the Minister confirmed that a committee was already working out details of the proposed VAT, assuring Nigerians that the committee’s assignment would soon be made public.