The proposed plan by the Federal Government to increase Value Added Tax from five per cent to 7.2 per cent, has been opposed by the Association of Small Business Owners of Nigeria (ASBON).
Speaking at a press briefing in Lagos, the President of ABSON, Dr. Femi Egbesola said that an increase in tax will trigger a rise in the inflation rate.
Although big businesses might want to seize the opportunity to increase the price of their commodities, Egbesola noted that the increase will diminish the rate of buying from Nigerians.
According to him, the Federal Government should shun the idea of increasing VAT and concentrate on expanding the tax net.
“Rather than an increase in VAT at this time, the compliance rate of the present VAT rate should be strengthened; other avenues could be explored in the short term too. Even though a VAT increase may at some point be unavoidable, now would be a bad time for an increase,” he advised.
He said that increasing VAT only indicates a lack of creativity from the government because, in recent times, nations do not embark on tax increase to generate revenue.
He stated: “Basically, the increment will directly be transferred to customers such that it will impact on their earnings and savings. However, the downturn for registered businesses such as ours will be that customers will now prefer to patronize substandard products.”
The ABSON president said that a lot of small business owners were yet to secure the Central Bank of Nigeria’s (CBN) Agri-Business Small and Medium Enterprise Investment Scheme (AGSMEIS) loans where Small and Medium Enterprise (SMEs) are expected to be able to access as much as N10 million loan at five per cent interest rate per annum.
“This is a demoralizing experience, frustrating the growth of our business and threatening its survival. The moment after pushing several times without success, many are giving up. This is not good for our economy. If the government really and truly wishes to grow the MSME sector, more than the usual attention and action need to be paid to our teeming needs,” he added.