Nigerian President Muhammadu Buhari on Tuesday presented a record N10.33 trillion ($33.8 billion) budget proposal for 2020 to the National Assembly.
The government said it is working to restore the Budget cycle from January-December format for proper planning and implementation.
While presenting the budget to the joint session of the upper and lower chambers, the president said the 2020 budget is based on a new VAT rate.
Recently, the government announced an increase in the country’s Value Added Tax (VAT) from 5% to 7.5% to generate more revenue and cater for infrastructural development, a move, some citizens say it will worsen economic activities.
During a radio appearance, Robert Omotunde, Head, Investment Research at Afrinvest, advised the government to expand VAT collections instead of raising the VAT rate. “Nigerian economy is consumption-driven and as of 2018, 73% of Nigeria's GDP was made up of consumption expenditure.
"If the government tax this at 5% VAT, Nigeria should have earned N4.7 trillion in VAT but the country got N1.2 trillion instead.”
President Buhari said the increased revenues from the VAT will be used to fund education, health, and key infrastructural activities.
“We will raise the threshold for VAT registration to N25 million turnover per annum, to bring relief to our small (est) businesses.
“VAT Act already exempts Pharma, Educational items and basic commodities. We will expand the exemptions,” he added.
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