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Tuesday, 23rd May, 2017
 
 Nigeria   ::   News
 
FEC Okays New VAT Policy, to hike Luxury Goods’ Tax
Feb 02, 2017
By: Mistura Salaudeen
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The Federal Executive Council (FEC) yesterday approved a new tax regime, just as it announced its intention to raise taxes on luxury goods.

Also yesterday, the council constituted a task force to device measures to force down the prices of food in the country and approved a memo for the procurement of more coaches for the Nigerian Railway Corporation (NRC) to improve rail transportation.

Minister for Finance, Mrs. Kemi Adeosun, who announced the approval of the new tax policy, after the FEC meeting presided over by acting President Yemi Osinbajo, said council approved the revised National Tax Policy meant to review the tax rates in certain areas.

She however pointed out that the government would work with the National Assembly for the amendment of certain tax laws before the commencement of the policy.

Adeosun hinted that while taxes on some basic commodities might not be increased, taxes on luxury goods would certainly be increased.

Asked if the council made any decision on reviewing the rate of value added tax (VAT), the finance minister said: “What the committee has shown is that we should look at actually increasing VAT on some luxury items.

“At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more.

“Champagne in the UK attracts VAT of 20 per cent, so why should it be five per cent in Nigeria? So, they have made recommendations that we should identify 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 talk to the National Assembly about to see how we can implement it.

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

Also concerned about the spike in food prices in the country, the federal government yesterday set up a task force to look at ways it could intervene and bring succour to the people.

This, according to the Minister of Information, Lai Mohammed, who also briefed newsmen after FEC meeting, was the resolution of the council.

Mohammed said: “FEC considered several memos and approvals were given. The major highlights were council resolved to set up a task force on food security.

“Government is quite concerned about the rising cost of food items and the fact that more often than not, even when these products are available, when they do reach the market they are sold at very exorbitant prices.

“So, the government has set up task force on food security to ensure that an end is put to the waste that occurs and with the tons and tons of produce sitting down in the farms rotting or in the markets getting rotten.

“The task force is an inter-ministerial committee made up of the Ministers of Agriculture, Finance, Industry, Trade and Investment, Water Resources, Labour, and Transportation.

“The important thing is to look at what areas of intervention can the government make. The intervention can be in the area of subsidy for transportation.

“That is being worked out, but this goes to show that government is very concerned about the rising cost of food and we are responding to it. The committee hopefully is expected to report back to council next week and concrete actions would be taken.

“Clearly government is concerned and is trying to do something to bring food prices down.”

The vice-president’s spokesman, Mr. Laolu Akande, gave the names of members of the task force as the Minister of Agriculture and Rural Development, Chief Audu Ogbeh; Adeosun, Minister of Industry, Trade and Investment, Dr. Okey Enelamah; and Minister of Transportation, Mr. Rotimi Amaechi; Minister of Water Resources, Mr. Suleiman Adamu; and Minister of Labour and Employment, Dr. Chris Ngige.

Akande said that representatives from the Offices of the Chief of Staff to the President and the Senior Special Assistant to the President on Sustainable Development Goals (SDGs) would also be on the task force.

He stated that while there had been reports of bumper harvests in parts of the country, the prices of food items remained high while some of the produce ends up wasted due to the absence of storage silos and transportation facilities for delivery to the markets.

Akande said: “One of the areas of focus for the task force, the acting president noted, would be to review the transportation and preservation processes, and see how government can intervene in those aspects to bring down food prices.

“The task force, which would be meeting with the acting president in the discharge of its urgent assignment, will therefore draw out a practical plan and present same to the council next week.”

According to him, the task force would also consider how to remove some of the factors making farm produce exorbitant.

Also, the Minister of State for Aviation, Hadi Sirika, who briefed reporters, said the council approved the procurement of coaches for the NRC to boost rail transportation and funds for the Kaduna airport during the closure of the Abuja airport.

On the procurement of coaches, Sirika said: “This is to boost rail transportation on the Abuja-Kaduna standard gauge rail line to enhance the movement of passengers and goods, especially following the impending closure of the Abuja airport.

“This is to also compliment the other airport in Kaduna. This is to increase our capacity to handle passengers during the Abuja airport closure.

“Then a memo was approved on joint briefing offices in all 21 federal government airports across the country.

They are for Lagos, Kano, Abuja, Port Harcourt, Ilorin, Sokoto, Maiduguri, Jos, Yola, Calabar, Enugu, Owerri, Kaduna, Benin, Osubi-Warri, Katinsa, Zaira, Minna, Bauchi, Ibadan and Akure, as well as the three aerodromes in Bonny, Escravos and Eket.

“These joint briefing offices will include the air automation and would co-locate the track-up projects, the total radar coverage, the air automation system, which include the air automation system and the pilot briefing offices.

“These are pre-fabricated because during the remodeling exercise of those airports, they were tampered with, so we thought we should just co-locate them in one area for efficiency and to safeguard against future relocations.”

 
 
 

 
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