TUC and Sharia Council reject proposed VAT hike in tax reform bills

The proposed rise in Value Added Tax (VAT) from 7.5% to 15%, which is part of the 2024 tax reform legislation that are presently being reviewed by the National Assembly, has been fiercely opposed by the Trade Union Congress (TUC) and the Supreme Council for Sharia in Nigeria (SCSN).
The Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, Joint Revenue Board Bill, and Nigeria Tax Bill are among the contentious tax proposals that President Bola Tinubu sent in October 2024, according to news reports.

Representatives from business stakeholders, state governments, labor unions, and religious institutions expressed their concerns about the proposed tax amendments during a public hearing on Wednesday at the National Assembly, stating that they could make Nigerians’ economic situation worse.

TUC: Nigerians Will Be Burdened by VAT Hike

Nuhu Toro, the TUC Secretary-General, urged the government to keep VAT at 7.5%, claiming that raising it to 15% would put additional pressure on businesses and households and exacerbate unemployment and inflation.

It is in the best interests of the country to keep the VAT rate at 7.5%. Nigerians, who are already dealing with mounting unemployment and inflation, will be further burdened by its increase. Increased taxes will put further pressure on firms and households, which could cause the economy to slow down, said Toro.

Due to their contributions to national development, the TUC also advocated for the preservation of important funding mechanisms like the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFund) and suggested increasing the tax exemption threshold from ₦800,000 to ₦2.5 million annually.

Sharia Council: VAT Needs to Drop, Not Rise

The Supreme Council for Sharia in Nigeria (SCSN) also supported lowering VAT to 5% or, at most, maintaining it at 7.5%.

Professor Nafiu Baba-Ahmed of Ahmadu Bello University in Zaria, who spoke at the hearing, contended that the VAT rate should not be raised above its current level, cautioning that doing so would further impoverish millions of Nigerians.

“Vat should be charged at 5% or, if necessary, 7.5%, but not higher,” he stated in Section 146 of the Nigeria Tax Bill, 2024.

The Nigeria Tax Bill’s inheritance tax clause was also contested by the Sharia Council, which claimed that it went against Islamic inheritance law.

“Under the deceased’s personal law, family income should not be interpreted to include inheritable property,” Baba-Ahmed continued.

Kano Government: The Tax System in Nigeria Is Ineffective

While supporting tax reforms, the Kano State Government criticized Nigeria’s tax system as complex and ineffective.