The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, has said that the Value Added Tax (VAT) was designed to support poor people, and not to create hardship for them.
Fowler was reacting to concerns that the proposed increase in VAT would cause more hardship for the poor, according to a statement from the FIRS, yesterday. He was quoted as saying,
In his words, “When you don’t consume certain categories of goods and services, you are not liable to pay VAT charges on those items. VAT is not charged on all medical and pharmaceutical products. It is not charged on basic food items. It is not charged on books and educational materials. It is not charged on baby products, fertilizers, locally produced agricultural and veterinary medicine. VAT is not charged on farming machinery and farming transportation equipment.
“Other services exempted from VAT are Medical services, Services rendered by Community Banks, People’s Bank and Mortgage Institutions, plays and performances conducted by Educational Institutions as part of learning and all exported services are exempted from VAT.”
Mr. Fowler noted that the revenue generated from VAT was being channeled towards assisting the poor by providing basic amenities. He clarified his earlier submission at the Senate Committee meeting which triggered widespread criticism on the planned VAT increased.
He said, “I was at a programme at the Senate. I was talking about projection in 2019 for the VAT. And I was asked a question about what my personal views were about the VAT and some people got it a bit wrong. Let me clarify some things.
“I understand that some people misunderstand what the VAT is. VAT is a consumption tax. If you don’t have money to purchase certain categories of goods and services and you don’t consume them, then VAT is not your problem.
“The VAT is used to assist the needy. VAT provides support for the needy, not a hardship on them. 85 percent of VAT collected is shared among states for them to provide free education, free health services, provide basic amenities among others,” he said.