The Arewa Economic Forum (AEF) has proposed the replacement of the current value added tax (VAT) with the point-of-sale tax system throughout the country.
The Chairman of the AEF, Ibrahim Shehu Dandakata, told a media conference on Friday in Abuja that the proposed POS tax model was simpler and cheaper, as it would be a genuine consumption tax paid at the point of sale than the current multi-layered VAT structure adopted by the Federal Government.
Dandakata said the proposed POS tax model would bring more companies, enterprises, and services under the government’s tax net, thereby enhancing collection efficiency and enabling a fairer distribution of revenue based on derivation.
“As a government, sales tax is cheaper, because it’s a one point tax at the point of sales, whereas VAT is a multilayered tax,” Dandakata argued.
Under the current VAT regime, Dandakata said consumers of goods and services are being charged VAT at every point of transaction.
“If you produce and you sell to a distributor, you charge a distributor VAT. If the distributor sells to a wholesaler, he will charge VAT. At every point, VAT is charged. This multi-layered VAT regime eventually translates to high costs of goods and services transferred to the end users,” he explained.
On the bil on the new VAT model currently before the National Assembly, Dandakata argued that what the AEF was proposing was one of the biggest challenges the federal government was facing in collecting the tax.
He pointed out that the Federal Government does not have the infrastructure and facilities to collect tax, adding that this accounts for why they’re trying to formalize it.
“So if you can’t collect, how do you get it reversed or reimburse a producer or distributor? How do you identify the person that needs the reversal? That’s why the AEF is saying that instead of going to the executor’s office, this is an easy way of widening the tax net, because if you are collecting the sales tax at the point of sales, that means that particular entity will be part of the tax net,” he said.
“Make it simpler and easier for people to pay one-point tax, and don’t have to go through all that rigmarole of getting the fund at the base. That would be very cumbersome and we know it’s not going to work,” he said
On the deplorable energy supply situation in the Northern part of the country, the AEF Chairman said he believes taking steps to address the region’s energy security and ensuring the availability and affordability of energy will be instrumental in driving economic growth.
Dandakata reiterated the forum’s call for the federal government to site one of the four proposed 100,000 barrels per day refineries by Korean investors in Kolmani, Bauchi state, where the first oil well was opened recently.
“This initiative would significantly reduce the costs of refining of petroleum products and transportation, while effectively meeting a substantial part of the northern market’s needs,” he said.
“Also, the Kolmani Integrated Development Project, which had reportedly attracted Foreign Direct Investment (FDI) of about $3 billion, was designed to house a 120,000-barrels per day refinery, a 500-million standard cubic feet per day gas processing plant, a 300-megawatt capacity power plant, and a fertiliser plant of 2,500 tons per day” he disclosed.
“We’re asking the federal government to use its influence to make sure that one of the refineries was sited in combined fields, not the federal government investing in the refineries. We have seen that, and we know that the government has no capacity to manage the operation of refineries” he stated.
On the growing insecurity in the region, the Forum commended the Federal Government and security agencies for their commitment towards eradicating banditry in the region.
However, the group urged the government to urgently address the growing challenge of banditry, terrorism and other organised crimes leading to vandalism of infrastructure and desertion of farmlands in several communities resulting in the prevailing situation of disruption of food production and supply in the, country.
“Counter insurgency are critical to the stability of our region and the nation at large, especially concerning harvesting and exploring the potential of our agriculture, commerce, and mining resources. We implore government agencies at all levels to expedite efforts in this regard, so that our lives can become safer and more affordable, especially in light of the direct link between food inflation and insecurity,” the AEF Chairman said.
