The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, announced at an investor meeting during the ongoing IMF/World Bank Annual Meetings in Washington, D.C., that the federal government is set to raise the Value Added Tax (VAT) to 15%.
However, he emphasized that this increase would primarily target luxury goods, leaving essential items untouched to protect vulnerable populations.
Mr Edun confirmed that a bill currently before the National Assembly proposes a gradual increase in VAT for luxury items, while essential goods consumed by poorer Nigerians will either remain exempt from VAT or be subject to a zero rate.
“President Bola Tinubu’s commitment is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected,” Edun stated.
He reassured citizens that the forthcoming legislation aims to ensure that the wealthiest contribute more, while essential goods for average citizens remain affordable.
The minister indicated that a comprehensive list of essential items exempt from VAT will be published for public awareness in due course.
Mr Edun expressed optimism about Nigeria’s oil sector, highlighting that improved security in oil-producing regions and new investments, particularly from Total and ExxonMobil, are expected to increase oil production and enhance foreign exchange inflows.
Regarding fuel subsidy removal, Edun noted that while the reform was announced earlier, its full implementation began last month.
He noted that the savings from this removal will start to impact the economy in the near future.
When asked about the potential for Nigeria to enter an IMF program, Mr Edun revealed that the Tinubu administration proceeded with issuing Domestic Dollar Bonds despite IMF advice against such a move.
He reiterated that Nigeria remains a member of the IMF and benefits from the institution’s support, but emphasized the country’s autonomy in making financial decisions.
