Lead Strategist at Gatefield, Adewunmi Emereuwa has criticised the Nigerian government’s 50% Value Added Tax (VAT) hike, describing it as a regressive policy that has worsened economic conditions for millions of Nigerians.
Emereuwa in an interview with Arise News on Saturday, cited government data and recent economic reports. He argued that the increase has done little to boost meaningful revenue growth while exacerbating inflation and poverty across the country.
Responding to concerns raised about how the 2019 VAT hike led to economic difficulties and the potential benefits of targeted VAT remittances, he strongly opposed the increase, emphasising its regressive nature.
“I think it’s very clear; we are talking about years of economic theory. The IMF, the OECD—everybody knows that VAT is inherently regressive,”Emereuwa began.
He explained that VAT disproportionately impacts consumers, particularly low-income earners, noting, “The view of VAT is as simple as: you are essentially making consumers pay more.
“The reason why governments use it as a measure is that it’s easy to collect—not because there is something very special or deeply useful about the VAT.”
Highlighting the 2019 VAT increase, Emereuwa pointed out its limited impact on revenue growth. “Interestingly, Nigeria introduced a 50% hike, and I like to do things by the numbers. From 2020 to Q2 2024, the data shows that the economic growth, on average, and revenue growth, on average, was about 30%.
“The lies they tell you are that this VAT increase has led to revenue growth for the government by over 100%, but that’s really not true,” he stated.
He further argued that the revenue growth attributed to VAT was largely inflation-driven. “When you see that the VAT was 50%, you also realise—and this becomes true—that the revenue is inflation-driven,”he said.
Emereuwa cited recent data to underscore the dire situation, noting, “The NBS just released a report—Nigeria Household Survey Report—which showed that more than half of Nigerians don’t know where their next meal is coming from.
“The economy has damaged people so much that more than 90 million Nigerians don’t know where their next meal is coming from, and I’m talking about government data.”
Given these realities, Emereuwa questioned the timing of a VAT increase. “I don’t think at this time we should be talking about it. I don’t want to say VAT is completely bad, but the timing itself is not what we should contemplate at this time,”he said.
He advocated for a tax strategy focused on long-term economic benefits rather than immediate revenue generation. “A tax strategy shouldn’t be first about immediate-term revenue for the government.
“Taxation can be a tool for economic maximisation. If you get more Nigerians working, you are going to grow Nigeria’s single largest income from the tax pool, which is personal income tax,”he added.
Emereuwa also criticised the government’s fiscal and tax policies, calling for better coordination. “Taiwo Oyedele is called the chairman on fiscal reforms and tax, and we are just obsessed with tax.
“There needs to be coordination between fiscal strategy and tax strategy,”he said.
He pointed out the inefficiencies in government spending, stating, You are seeing a government that is wasteful—a government that spends so much money on needless things, bloating the bureaucracy, extracting government money on unproductive things—and you are essentially taxing people. It’s not a coordinated strategy, to be honest.”
He expressed conditional support for a VAT hike, provided the government addresses key economic challenges. “I would support a VAT hike if they tell me they are bringing inflation down to single digits, if they tell me that the interest rate is coming down, if I know that the government is spending my revenue on productive things,”he said.
However, Emereuwa warned that current VAT policies do not prioritise Nigerians. “What you are seeing right now is that the government wants more money, and it always does that when it raises the minimum wage. It knows that it has no money for it,”he explained.
He emphasised the need to expand the tax net meaningfully, stating, “Consolidation of the tax net would be a meaningful thing. But when you take that away, you are essentially saying that the only thing good about this tax bill is that the government is optimizing its revenue collection. It is not good for Nigerians fundamentally.”
In conclusion, he called for the government to prioritise Nigerians in its fiscal policies. “Nigerians have to come first. The concept of universal taxation is ‘no taxation without representation.’ Nigerians have been represented badly.
“Unemployment numbers are crazy, and the government is essentially making VAT policy because their arguments are faulty,”he said.
Boluwatife Enome
Follow us on:
