The former minister of finance, Zainab Ahmed, says the government has plans to raise value-added tax (VAT) to 7.5 per cent by 2020 from the present 5 per cent.

She disclosed this to newsmen while speaking on the sidelines of the ongoing Bloomberg Emerging and Frontier Forum in London on Tuesday.

This, she said, would help the federal government improve revenue generation.

The VAT is a type of consumption tax placed on a product at every stage of processing/value addition. The cost is usually paid by the consumer. Ahmed said, “We have developed a strategic revenue growth initiative, which we have started implementing.”

“Our target is to increase revenue to 65 per cent minimum in 2019 so that in the next three years, we are able to attain 80-85 per cent of our revenue target.

 

“We are looking at increasing value-added tax from 5 per cent to 7.5 per cent. Five per cent is one of the lowest VAT globally. The increase will not be done overnight but hopefully, by the next budget (2020), the new increase will take effect.

We recently increased the minimum wage and one of the agreements we had with labour was that there would be some marginal increase in VAT to enable us to handle the incremental cost of increasing wages.”

The Executive Chairman of the Federal Inland Revenue Service (FIRS) Mr Babatunde Fowler, had previously denied reports of the agency’s plan to increase VAT.

Instead, Fowler said his agency recommended an increase in the number of people and companies that pay VAT.

Speaking on the new cabinet, Ahmed said she would like to be reappointed as minister of finance.

“I would like to go back to the cabinet in the same role to continue the work that we started.

“I was only there for nine months; I started a lot of initiatives that I would love to push.”