There have been anger and frustration in Nigeria when, as the Atiku/Buhari case was being ruled on at the Presidential Election tribunal, government raised the Value Added Tax, VAT, from 5% to 7.2%, an increase of 2.5%. Government, however, put no palliative in place to cushion the effect on poor Nigerians.
Nigeria has recently been classified as the poverty capital of the world. In recent times, also, Government has closed Southern borders of the Country leaving the North open, generating inflation. A bag of rice has risen from 14,000 to 22,000 within two weeks.
But the new policy has elicited so much backlash that government is making frantic efforts to defend the action, more so as the Opposition Peoples Democratic Party is insisting that the presidency is gloating over the suffering of the masses.
Part of the argument was that VAT is targeted at only luxury products that will not effect the poor. They also say the VAT is meant to facilitate states’ ability to pay the minimum wage. The states and local government take 85% of VAT proceeds.
After signing the minimum wage before the elections, the Federal government started negotiations on a downward review of the same signed agreement with the labor unions.
