Follow Us on Google
Vera Wisdom-Bassey
The Managing Partner at Okwudili Ijezie and Co. Chartered Accountants, Mr. Blakey Ijezie, is a tax consultant. He is of the view that the timing of the recent increase in the Value Added Tax (VAT) is wrong and submits that it will heighten inflationary pressure. In this interview with Daily Sun, he speaks on the impact of the increase in VAT and his advice to the government to discourage it from going ahead with the policy, among other issues.
Journey to taxation
We started our taxation seminar from August 15 to 16, 2019, with Internally Generated Revenue (IGR) and we do it every month in September. We did one seminar in the lien on the quarters bank account by Federal Inland Revenue Service (FIRS).
In October/November, 2019, we did one on VAT. We wanted to do it in December but it was a very busy month for most people because they are planning to go for Christmas, so in January we had one on Finance Act 2019.
So, basically, as an organisation, we are into taxation. Every month, apart from December, we choose topics that are topical and relevant to the nation; we enlighten and educate government on how to generate internal revenue.
The importance of this is to educate the three tiers of government on IGR. Unfortunately, most of them did not turn up but we weren’t dissuaded; we continued.
The second one was on lien. We want to enlighten the public that the action by FIRS to hold people’s accounts in the banks was illegal. We wanted to point out to the government that the timing of increasing VAT from 5 per cent to 7. 5 per cent was wrong. This time around, we wanted to advice the government on Finance Act 2019; that is what we do. We deal with topics that are news worthy and topical. Now everybody is talking about financing, next time we may go to Abuja so that the people from that part of the country will feel our impact as well as advice the government, companies and individuals on what to tap from taxation.
Wrong timing of VAT increase
What we are saying is, the economy is bad, companies are suffering, individuals are suffering, the value of lives of the people has depreciated from 2015 till date, so this is not the time to increase tax. The timing is wrong. What we are advocating is that finance houses should think outside the box. Tax offices, Ministry of Finance, from federal to state level, should think outside the box. The number seems to be less than 40 per cent, therefore, the governments should see how they will get the people into the paying net; the larger the better, the more the merrier. It is not a question of getting people to pay an additional 50 per cent. Like I said in my last interview, people are worse off now than they were in 2019. If the government does not know that people are suffering, let them conduct an independent survey and know that the people are worse off now than they were in 2015, they should be looking ahead.
Does Nigeria practice modified added tax?
What we are operating is not a modified added tax. Ghana is one of the countries operating a modified added tax. Even Ghana reduced theirs from 50 per cent to 25 per cent. So, why should we be going up, we should look at how we can lift the small scale industries that are the highest employers of labour. And I do hope it will be revisited. The National Assembly has the right to amend it, the timing is wrong, I stand by it.
Advice to the government
Unfortunately, government never listens to advice. When they were to increase VAT from 5 per cent to 7.5 per cent, I advised them in an interview not to increase it but they never listened. I also advised the National Assembly not to increase VAT, so I will not advice them again. But it is most unfortunate that the nation will see the effect of this increase this year because inflation will go up and once the companies can no longer meet up, they reduce the quantity of what they produce and they will pass the cost on to the public, who will suffer it.
So the government hardly takes advice. This time is not the best of time for the economy. It is not when the economy is going down that we should increase VAT; it is wrong.
