The Manufacturers Association of Nigeria (MAN) on Thursday said the proposed VAT rate increment was unfriendly to the manufacturing sector.
The Director-General of the association, Mr Segun Ajayi-Kadir, made it known in Lagos, in spite of the rebuttal from the Federal Inland Revenue Service (FIRS) on the issue.
“the proposed VAT increment did not take into cognisance the prevailing times and ongoing government efforts to re-invigorate the economy Ajayi-Kadir also said.
The director-general said that as plausible as the recommendation to increase VAT looked, implementing it at this time would boomerang.
According to him, the timing is inappropriate, especially at a time when the minimum wage of N30,000 was just agreed upon. “This can send the wrong signals that the government is insensitive to the plights of the low- and middle-income earners, who are clearly in the majority.
“MAN still wishes to state the implication of carrying out such policy, if the alleged proposed increase in VAT is anything to go by.
“It will be seen as a typical case of government simply taking back what was given with the right hand through the National Minimum Wage with the left hand, through the increase in VAT,” he said..
According to him, this is above 23 per cent, as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate.
The director-general said that the Nigerian economy would be in a more vulnerable state if VAT should be increased now
Ajayi-Kadir also advised the government to continue to ramp-up support for the manufacturing sector in the best interest of the over 200 million Nigerians.
He said that the burden of the tax would be shifted to the Nigerian consumers that were already struggling.
In addition, Ajayi-Kadir said the economy would certainly experience demand crunch, inventory of unsold items would soar, the profitability of manufacturing concerns would be negatively impacted, many factories would witness serious downturn or wound down operations.
Ajayi-Kadir urged the Federal Government not to increase VAT at this point in time, but to consider the implementation of the other tax specific recommendations. This would also worsen the already high unemployment position in the country.
“MAN as a strategic stakeholder in the nation’s development agenda appreciates the need for government to generate more revenue to fund its developmental initiatives amidst declining revenue from oil.