• Friday, March 29, 2024
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MAN sees job losses if VAT is raised

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The Manufacturers Association of Nigeria (MAN) says any increase in the Value-Added Tax (VAT) will have a negative consequence on the production capacities of factories, resulting in job losses.

The association explains that it will lower the purchasing power of consumers.

MAN is reacting to a recent report which gave an inkling that the government might be planning to increase VAT by 50 percent. A statement signed by Segun Ajayi-Kadir, director-general of MAN, says though this report has been denied by relevant authorities, the association still wishes to warn that such a policy is not manufacturing-friendly as the proposed increase appears not to have taken into cognisance the prevailing times and the ongoing government efforts to re-invigorate the economy.

The association explains that raising VAT will sharply reduce consumption, cut sales, lower government revenue,increase unemployment and stifle economic growth.

“No controversy, the burden of the tax would be shifted to the Nigerian consumers that are already struggling. The economy would certainly experience demand crunch, inventory of unsold items would soar; profitability of manufacturing concerns would be negatively impacted; many factories will witness serious downturn or wind down operations,” the statement says.

MAN says that such an increase could send a wrong signal that the government is not sensitive to the plight of the low- and middle-income earners, who are clearly in the majority, as citizens will liken it to a case of government taking back what it gave through the National Minimum Wage.

“This would also worsen the already high unemployment position of the country which is above 23 percent as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country,” it says.

The association says it acknowledges that the government needs huge revenue to fund developmental projects, but advises the authorities to tread with caution in the drive for improved revenue.

“The economy just recently exited recession with the fragile growth rate of less than two percent recorded in 2018 and should be delicately managed,” MAN admonishes.

MAN says a cross-reference of Nigeria, Turkey, Malaysia, China and South Africa shows that though Nigeria’s VAT is comparatively low, it also lags others on per capita income, national minimum wage and global competitiveness. MAN advises the government not to raise VAT but widen the tax net.

 

ODINAKA ANUDU