Senators threaten showdown over FG’s plan to increase VAT

The Finance Act (amendment) Bill seeking incremental changes to Nigeria’s tax and fiscal law, which passed second reading on the floor of the Senate on Wednesday, may not be plain sailing to become law as some senators have vowed to shoot down the bill.

Specifically, they said they would mobilise stakeholders to reject the bill during the public hearing.

The majority of the legislators, who spoke in separate interviews with Sunday punch on Friday, said the proposed tax hike would worsen Nigerians’ plight. During plenary on Wednesday, some senators raised points of objection to the bill, saying they were not given copies of the bill. Unlike the usual legislative practice, copies of the lead debate read by the Senate Leader,  Yahaya Abdullahi, were distributed to the lawmakers, but the details of the proposed bill were not attached to the document.

Attempts by senators to prevent the Leader of the Senate from going ahead with the lead debate pending the details attachment were frustrated by the Senate President Ahmad Lawan. Using his power of the gavel, Lawan insisted that the general principles of the bill should be discussed without the details of the document. This was despite their vehement protests that such action would not enable them to make informed contributions, which the second reading was meant to achieve.

Senators Yaroe Binus (Adamawa South) and Betty Apiafi (Rivers West) raised separate points of order to draw Lawan’s attention to the anomaly.

They argued that non-attachment of the amendments to the bill would not enable their colleagues to speak from an informed point of view. The President of the Senate ruled both of them out of order, saying the details of the bill would only be made available, only to members of the Finance Committee.

Abdullahi led the debate following the insistence of Lawan that the bill should be considered even though the details were not made available. According to him, the bill seeks to promote fiscal equity by mitigating instances of regressive taxation, reforming domestic laws to align with global best practices and introducing tax incentives for investments in infrastructure and capital markets.

He also said the bill would support small businesses in line with ongoing ease of doing business reform. He said it would raise revenues for the government by various fiscal measures, including a proposal to increase the rate of Value Added Tax from 5 per cent to 7.5 per cent.

Senators kick

Senator Patrick Akinyelure, from Ondo Central, also noted that hike in VAT would not be necessary if   the revenue collection agencies were effective in their operations. He said, “There may not be a need for the review of the tax law seeking to increase VAT to 7.5 per cent if the revenue collection agencies are effectively discharging their functions.” Speaking with our correspondent on the issue, a former Senate Leader,  Ali Ndume,  said he would never support any hike in VAT.

Ndume said the Communication Service Tax Bill, which has passed first reading, was aimed at replacing the proposed VAT hike. He insisted that the majority of his colleagues in the Senate were not in favour of VAT increment.

He said, “Nobody wants any increment in VAT. Our people are already rejecting it claiming that it would lead to inflation and increase their burdens. “They are saying the prices of goods and services will also increase.

“That is why I’m also opposed to it as a representative of my people, and decided to come up with legislation that will increase the revenue base of the country without much impact on the masses.

“The Communication Service Tax Bill is the alternative we are proposing and it’s better than VAT increment.” Other senators, who spoke to Sunday punch, vowed to ensure that the bill did not see the light of day.

A Peoples Democratic Party Senator from the South-South, who spoke to our correspondent on condition of anonymity, said the bill would seriously affect Nigerians. He said, “The Buhari administration knows what it is doing, that’s why they did not include the details of the bill.

“They know that the Nigerian Television Authority usually air the proceedings of the Senate live on Wednesday and they know what would happen if we make contributions based on the specific objectives of the bill.

“VAT increase   will lead to hyperinflation and kill small and medium enterprises.”

Another South-South Senator, who also spoke on anonymity, promised to vote against the passage of the bill. He also promised to lead a protest against it during the public hearing.

He said, “The bill stipulates that we are amending seven Acts but we don’t have the details of the amendments.

“The only one they told us is that it seeks to increase VAT from 5 per cent to 7.5 per cent. Who knows if it contains other provisions that are worse than that? “I will attend the public hearing and I will rally stakeholders to reject the bill, because I did not seek the votes of my people to come and support legislation that will make their life more miserable.”

Senator George Sekibo from Rivers East gave some indication that the bill would not get the required support of many lawmakers and warned his colleagues to be careful about the legislation. He also insisted that the copies of the bill should be made available to senators. Nigerians really suffering, FG should be sensitive, says Abaribe

The Senate Minority Leader, Enyinnaya Abaribe, cautioned his colleagues to listen to the yearnings of Nigerians before taking any steps that could affect them. Abaribe, who spoke with our correspondent on Friday, however, said his colleagues holding the same opinion with him on the proposed VAT increase would do the needful at the right time. He said, “Nigerians are really suffering under great difficulties and I believe that the government should be sensitive to the plight of the people.

“We believe that what the government should do is to expand the tax net and not to over tax those that are already paying. There are too many things that the government can do to expand the tax net. Asked to explain if the bill would be rejected, Abaribe said, “When we get to that bridge, we will cross it.”

Provisions contains in Finance Bill not acceptable — Apiafi

A senator from Rivers State, Betty Apiafi, told our correspondent on Friday that the provisions in the controversial bill were not acceptable to her. She said, “The lead debate didn’t contain detailed information of what we are amending. We don’t know the provisions of the bill as of the time we were debating on its general principles.

“The details were unfortunately provided after the bill had passed second reading.  The provisions are not acceptable, we want it to go for public hearing and get the response of Nigerians so that we would know how to deal with it.”

Provisions in Finance Bill, anti-investment, says, Senator

Meanwhile,  a member of the Senate Committee on Finance, who spoke with our correspondent on condition of anonymity, said the provisions in the Finance Bill could drive away investors and kill small and medium scale enterprises.

The senator said apart from reducing the purchasing power of the people,  the bill would lead to high cost of production and raise  inflation. He said, “The Finance Bill contains six different parts of requiring various amendments and we didn’t get the details before the Senate President called for a debate on its general principles.

“I can’t even call what the Senate Leader read a lead debate, because it (lead debate) usually contains the details of what we want to talk about.

“The Finance Bill contains an amendment to Personal Income Tax, Company Income tax,  Value Added Tax, Customs and Excise tariffs, Capital Gain Tax, and  the  Petroleum Profit Tax.

“Some people don’t understand why we are opposing the bill. Some of our colleagues just want us to do something that will excite the executive but they will understand one day.

“In trying to raise the tax, we should not use it to discourage medium and small enterprises and even multinational investors. In one breath, we are encouraging young Nigerians to start SMEs, in another breath,  we are discouraging them with taxes.

Pix: The Senate in session