FG to increase VAT on luxury items

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Federal Government has announced plans to increase the Value Added Tax on luxury items.

Minister of Finance, Kemi Adeosun, disclosd this after the federal executive council meeting on Wednesday.

Nigerians currently pay 5% VAT, one of the lowest in the world, introduced in 1994 by the military government.

Adeosun, “What the (review) committee report has shown is that we should look at actually increasing VAT on some luxury items. At 5% we have lowest VAT.

“And while we don’t think VAT should be increased on basic items, if you are going to drink champagne, for instance… in the UK you drink champagne the VAT is 20%, so why should it be 5% in Nigeria.

“So they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately. And I think that is a very valid and sensible suggestion which we are going to take to the national assembly to see how we can implement it.

“But as far as basic goods are concerned, no there will be no tax increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more.  The National Assembly will decide the percentage.”

She said it will address the low tax-to-GDP ratio, which at 6% is one of the lowest in the world.