… To increase VAT, Labour reacts
By Ikenna Omeje
The Nigerian Senate, on Tuesday, passed the N30,000 National Minimum Wage Bill into law, at plenary session.
The passage followed the submission of the report of the ad hoc committee set up to review the new minimum wage. The committee was headed by Senator Francis Alimikhena.
The Senate also requested that the Federal Government should submit a supplementary budget, which would include the structure of the new national minimum wage.
Recall that the House of Representatives had earlier in January, approved the new figure as the national minimum wage.
Reacting on the passage of the bill at the red chamber, the Acting President of the Nigerian Labour Congress (NLC), Comrade Najeem Yasin, commended the Senate for passing the bill into law.
He said, “We commend the senate for the quick passage. But it is not yet over because we want them to make sure that the process gets to the logical conclusion and for the quick implementation of that N30, 000. Nigerian workers are happy and commends them.
“We stand by the N75, 000 punishment for employers who fail to implement the law which has been passed. We have been fighting for this N30, 000 for a long time and the governors have been opposed to it. But now, it has been passed. Nigerian workers are now looking forward to the signing of the bill into law.
“We want them to start implementing it before the May Day celebration so that Nigerian workers can have good reasons to celebrate.”
Meanwhile, the Minister of Budget and National Planning, Udo Udoma, on Tuesday, said that the Federal Government plans to increase Value Added Tax (VAT) by 50 per cent to enable it pay the new national minimum wage.
Udoma said the raise, first announced by the chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, will create the required funds to meet the new wage obligation being approved by the National Assembly.
Both men appeared before the Senate Committee on Finance, headed by John Enoh. The officials were summoned by the committee to explain details of the 2019-2021 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
Fowler said the proposed payable VAT based on the increment would be between 6.75 per cent and 7.25 per cent as against the 5 per cent on all products in the country. This implies an increase of between 35 per cent and 50 per cent.
He added that the increment will affect the Company Income Tax and the Petroleum Profit Tax.
“By the end of this year, we should be ready for an increase in the VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go for those trips. We should be ready for an increase on VAT,” he said.
“I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax,” Fowler said.
Udoma explained that the increment is necessary in order to create funds for the minimum wage.
“It will be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the Minimum Wage.
“Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states; it is a tough time to review wages. But the N18,000 is really too low and it is difficult for people to live on N18,000.
“The President supported a revision but it is important that as we are revising (the Minimum Wage), we make sure that it can be funded. That is why we set up the Bismark Rewane Technical Committee.
“So we will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the Minimum Wage.
“Not just fund the Minimum Wage but as you announce it, you now enter into negotiations with those above the Minimum Wage and we have to be prepared for that.”
On wages of workers above the minimum wage, Udoma said a new scale would be subject to negotiations which will start soon.
“On minimum wage, there is an issue of what about the other levels. Those will be subject to negotiation. Normally after you announce minimum wage, you’ll now (go) into negotiations, probably demands from people who are earning more than that.
“It (new wage) will be subject to those negotiations. Federal government will have negotiation, state government will have negotiations. At this level, we’ll also throw open our books and show in terms of ability to pay will be taken into account.”