In an effort to shore up the federal government’s revenue base, the Federal Executive Council (FEC) yesterday approved a new tax regime, just as it announced its intention to raise taxes on luxury goods.
Also yesterday, the council constituted a task force to device measures to force down the prices of food in the country.
The council equally approved a memo for the procurement of more coaches for the Nigerian Railway Corporation (NRC) to improve rail transportation.
Minister for Finance, Mrs. Kemi Adeosun, who announced the approval of the new tax policy, after the FEC meeting presided over by acting President Yemi Osinbajo, said council approved the revised National Tax Policy meant to review the tax rates in certain areas.
She however pointed out that the government would work with the National Assembly for the amendment of certain tax laws before the commencement of the policy.
Adeosun hinted that while taxes on some basic commodities might not be increased, taxes on luxury goods would certainly be increased.
Asked if the council made any decision on reviewing the rate of value added tax (VAT), the finance minister said: “What the committee has shown is that we should look at actually increasing VAT on some luxury items.
“At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more.
“Champagne in the UK attracts VAT of 20 per cent, so why should it be five per cent in Nigeria?
“So, they have made recommendations that we should identify some luxury items and increase VAT on those items immediately.
“And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about to see how we can implement it.
“But as far as basic goods are concerned, there will be no increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. But the National Assembly will decide the rate,” she said.