Nigerians reacts to Federal Govt slam on 5% VAT on online shopping

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Mixed reactions have trailed the proposed plan by the Federal Government to slam a five percent Value Added Tax (VAT) on goods bought online.

Experts told newsmen on Friday in Lagos, that the plan could discourage the growing digital economy, while some expressed worry that the revenue realized would not be properly utilized.

Mr. Babatunde Fowler, the Chairman, Federal Inland Revenue Services (FIRS) had said that the government was considering a five percent VAT for online purchases to raise revenue to fund the budget. Prof Sheriffdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, said that the online space was still growing and taxing it now would discourage transactions. What is your take on FG plans to increase VAT to 7.5%.

In his opinion, Dr. Chijioke Mgbame, Associate Professor, Accountancy Department, University of Benin said that slamming a five percent VAT on online purchases was not abnormal.

Mgbame, however, said that the greatest worry lay on the proper use of tax revenue for developmental purposes. “Nigerians are worried because they do not see the benefit for tax payment. “Some commodities like foodstuff and children clothing should be exempted from tax,’’ Mgbame said. The don noted that the structure of VAT was important and the welfare of the citizens should also be considered. Also, Dr. Phillip Ujomu, Associate Professor,

More so, there seems to be the issue of citizens not easily seeing the positive impact of previous taxes. Court to rule on a suit seeking to stops ministerial inauguration on Monday. The truth is that Nigeria is struggling with its economy and is borrowing a lot to do basic things. “So, taxing the people more is an easy avenue to earn more money from peoples’ labor,’’ Ujomu said. Also speaking, Mr. Chinedu Bassey, the Programme Officer, Tax Justice and Financing for Development of the Civil Society Legislative and Advocacy Centre (CISLAC), said that the digital economy was not captured in the Nigerian tax net.

Bassey said that it was necessary to bring them into the tax net first rather than “taxing them arbitrarily’’. “Incentive is not wrong. Incentivize the digital economy into the tax net,’’ Bassey said. (NAN)