Minister of Finance and Coordinating Minister of Economy, Wale Edun has confirmed the federal Government plan to hike the value Added Tax, VAT to 15%, saying the increase will only affects luxury goods. Mr Edun stated this during the ongoing investors meeting of IMF/World bank Annual meeting in Washington DC, saying that a current bill before the National Assembly is targeted to raise VAT on luxury goods while essential items like food will be exempted.
According to the minister, “In terms of VAT, President Bola Tinubu’s commitment is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected,” Edun said.
“So, the Bills going through the National Assembly in terms of VAT will raise VAT for the wealthy on luxury goods, while at the same time exempting or applying a zero rate to essentials that the poor and average citizens purchase.”
However, Edun revealed that the list of essential goods exempted from VAT will be made available to the public in due course.
Speaking about the oil sector, Mr. Edun also expressed optimism regarding the oil sector, noting that improved security in oil-producing regions and new investments, particularly by Total and ExxonMobil, would result in increased oil production and boost foreign exchange inflows.
Meanwhile, addressing the issue of fuel subsidy removal, the minister disclosed that while subsidy reform was announced earlier, the full implementation only took effect last month. He emphasized that the savings from the removal would start to have a more significant impact on the economy going forward.
In response to a question about the possibility of Nigeria entering an IMF program, Mr. Edun revealed that the Tinubu administration went ahead with the issuance of Domestic Dollar Bonds despite advice from the IMF against such a move.
He reiterated the Tinubu government commitment to IMF as a member as the administration has benefitted from the institution, although the country is exercising its financial autonomy.
