The Federal Government has announced plans to increase tax on luxury items like champagne.
This was revealed by the Minister of Finance, Kemi Adeosun, after the Federal Executive Council meeting on Wednesday.
Nigerians still pay 5% VAT, which was introduced by the military government in 1994 and is one of the lowest in the world.
“What the (review) committee report has shown is that we should look at actually increasing VAT on some luxury items. At 5% we have lowest VAT,” Adeosun said.
“And while we don’t think VAT should be increased on basic items, if you are going to drink champagne, for instance… in the UK if you drink champagne the VAT is 20%, so why should it be 5% in Nigeria.
“So they have made recommendations that we should pull out 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 take to the national assembly to see how we can implement it.
“But as far as basic goods are concerned, no there will be no tax increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. The National Assembly will decide the percentage.”
Adeosun further explained that this will address the low tax-to-GDP ratio which is at 6%.
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