The total revenue that accrued to the coffers of the government from Value Added Tax between October 2023 and March 2024 increased by 58 per cent, Saturday PUNCH investigation has shown.
This was contained in the various financial reports released by the Federation Account Allocation Committee between October 2023 and March 2024.
According to a statement issued on November 22, 2023 by the Director (Press and Public Relations) of the Ministry of Finance, Stephen Kilebi, FAAC said it shared N906.96bn among the three tiers of government for October 2023.
The committee disclosed that part of the shared funds included VAT of N347.343bn, which it said, was N43.793bn higher than the N303.550bn distributed in the preceding month.
“The Federation Account Allocation Committee at the end of the meeting indicated that the Gross Revenue available from the Value Added Tax for October 2023 was N347.343bn, which was an increase from the N303.550bn distributed in the preceding month, resulting in an increase of N43.793bn.
“From that amount, the sum of N10.894bn was allocated for the Cost of Collection, and the sum of N10.003bn was given for Transfers, Intervention and Refunds. The remaining sum of N323.446bn was distributed to the three tiers of government of which the Federal Government got N48.517bn, the states received N161.723bn, and Local Government Councils got N113.206bn,” the FAAC stated in its November release.
Investigations by Saturday PUNCH showed that the VAT generated in November was N335.656bn, which was lower than the October estimates, but between December 2023 and March 2024, the VAT revenue steadily increased.
It was N458.622bn in December 2023, N420.733bn in January 2024, and N428.80bn in February 2024.
In a statement by the Director of Information and Public Relations, Ministry of Finance, Mohammed Manga, on Friday, April 19, 2024, FAAC said the gross revenue from VAT for March 2024 amounted to N549.698bn, which was N89.210bn higher than the preceding month’s estimate.
FAAC had attributed the increase in VAT to the country’s economic growth and improved tax compliance, but a comparison of the N347.343bn VAT generated in October 2023 with the N549.698bn VAT made in March 2024 gave a difference of N202.355bn, which was 58 per cent of the October figure.
However, the Federal Competition and Consumer Protection Commission on Friday, April 19, 2024 attributed the prevailing hike in the cost of goods in the country to multiple taxations and transportation costs.
The FCCPC said it came about this after a comprehensive investigation into the factors contributing to the relentless hike in the prices of goods across the country.
The FCCPC Director, Surveillance and Investigation, Mrs B. Adeyinka, disclosed this while briefing journalists during a market surveillance to enforce prices in Masaka Markets, Nasarawa State last week.
She said the FCCPC conducted extensive interviews with marketing executives and sellers across various sectors of the country’s economy before arriving at the discovery.
“Despite government efforts to stabilise the currency, prices remain high. Our findings point to a complex web of factors, including multiple layers of taxation and transportation costs that are driving prices up,” she said.
Recall that the Federal Government in October last year hinted that it might raise VAT rates from 7.5 per cent in the medium term to probably 15 per cent as the International Monetary Fund had over time advised.
The Federal Government had said, “The VAT projections over the medium term are based on holding the rate at 7.5 per cent. Raising the VAT rate, however, remains a policy option for government to keep in view over the medium term.”
The government had at that time said it wouldn’t raise the VAT rate but would intensify efforts at improving VAT coverage and collection efficiency.
But speaking with Saturday PUNCH, a former chairman of the Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said there was a strong connection between the increased VAT revenue and the hike in the prices of goods in the country.
He said, “Of course, there is. You know the VAT is a percentage of the price of those things. And in many cases, prices have doubled recently. For instance, if something costs N100 and the VAT is 7.5 per cent, but if the same thing is now N200, that means the VAT proceeds will double.
“It is like that for practically all products that are ‘vatable’. So, there is a very strong correlation between the increases in the prices of goods and services and the VAT revenue.
“Don’t forget that all those importations are also ‘vated’. You know the costs of imports now. All the prices have gone up. So, the VAT on all of them has increased.
“Ideally, if not that the volume of sales drop, we should be taking about close to a 100 per cent increase in VAT revenue.
However, due to the fact that the increase in price has also led to a decrease in volume, that is why we are not talking of even a higher percentage. But there is a very strong correlation between the prices and increase in VAT revenue.” (Punch)
