The chairman of the South East Governors Forum and Governor of Ebonyi State, David Umahi, has expressed danger over the plan by the federal government to increase Value Added Tax (VAT) from 5% to 35%.
He stated that such increase is like digging a hole to fill a hole.
Umahi said that the increase in the Value Added Tax (VAT) from 5% to 35% to pay workers salaries will make things difficult for the people of the country and called on the organized labour to sit down with government to consider the plan.
The governor made this known at his office at the Government House, Abakaliki while addressing the staff of his office, who were celebrating his re-election victory, noted that with the proposed plan by the federal government, anyone going to buy something will pay 30% VAT than it used to be.
“I saw in a paper where the federal government is said to be considering lifting VAT to 35% to pay salaries. It is all about digging a hole to fill a hole because we have not come to point of realization or honesty about how to solve our problems and it is important.
“Federal government is borrowing money, state has been banned from borrowing money. And so, if VAT is lifted from 5% to 35% which means
that any of us that is going to buy anything is going to pay 30% than what we have been buying. It is important that labour sits down with government.
“There is no fraud that goes on in civil service that is not being orchestrated by civil servants and if we can plug down the stealing or cut down the cost of projects, we should be able to have enough to cater for civil servants and non-civil servants.
“We are in for deeper problems all over the nations we all sit down and look at the problems and how to solve it. No Governor will make magic, no President will make magic. If they give us N2bn and the wage bill is N2bn, you can’t make any magic. You pay only wage bill and then go to sleep.
“No amount of money paid to civil servants can be enough, it is only the one they make themselves that will assist them. If you pay somebody in grade level may be 10 N50,000 by the minimum wage and he goes to hospital, private hospital which bills high because they will pay VAT on the drugs you will pay more in drugs . If you go to buy exercise book for your children, you will pay more. You will pay more
in everything. So, by the end of the day, civil servants may be crying we should go back to status quo and therefore the increment may not be in the reason.
“I am not against the increment but when I was talking about the minimum wage, I told you people that federal government was considering doing something to enable them pay, that is raising VAT, which is going to be tough for the country. All the building materials will have 35% VAT, cement will come up with 35% VAT meaning those who have not built houses will be struggling to build.”
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