FG mulls VAT, Excise Duty increase on Champagne, Soft Drinks as it rolls out its Strategic Revenue Growth Initiative

The Federal Government has unveiled its Strategic Revenue Growth Initiative (SRGI) for sustainable revenue generation in various sectors of the economy, part of which is to increase Excise Duty rates on certain goods as well as Value Added Tax (VAT) from the current 5%.

Speaking in Abuja while launching the SRGI, Wednesday, the Minister of Finance, Mrs. Zainab Ahmed, said the implementation of the initiative would significantly boost the federal government revenue outlook in the months and years ahead.

“Nigeria’s low revenue generation capabilities have been an enduring challenge to past and present governments. Although we are celebrated as the country in Africa with the largest economy, translating this wealth into revenues remains a challenge, she said.

The minister disclosed that Excise duties would be enlarged beyond the current tobacco and alcohol, to include carbonated drinks.

“We are considering increasing excise duties to include carbonated drinks, just like you have excise duties on tobacco and alcoholic drinks.

“But this is going to be a subject of a study because we have to identify which ones to be affected and the best way to apply the taxes. So we have some work to do before we can say this will be done in March, in June, September of December of 2019,” the minister said.

The minister revealed that the government was also looking at increasing VAT from the current rate of 5%.

“We are studying the possibility of a VAT increase. But you also know that a VAT increase requires an amendment of the law. So a steering committee will look at the details. It is most likely that the VAT increase will be selective. It will be on special items. It will not be across the board.

“During the course of 2019, we will have the clarity as to which items and what the rate will be and we will have to take a request to the National Assembly for amendment to the law,” she said.

On luxury goods tax, she said, “There is also going to be luxury goods tax. Already there is a luxury tax on jets. There are very few exceptional items that are considered luxury.

The minister said that the new push for revenue generation had become necessary due to the low level of its record over the years, amid mounting expenditure needs.

Speaking in the same vein, the Chairman of the Federal Inland Revenue Service (FIRS) Mr. Babatunde Fowler, disclosed that only a handful of items would be affected in the upward review of the VAT.

“As the minister has said, the VAT upward review will only affect items that I believe are not necessary. Those who want to take Champagne, I believe will not mind paying some more tax on it,” Fowler said.

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