Budget 2020: Rice, Bread, Milk Exempted as Buhari Proposes VAT Increase

In News 2019-10-08 16:18:02
Budget 2020: Rice, Bread, Milk Exempted as Buhari Proposes VAT Increase
Budget 2020: Rice, Bread, Milk Exempted as Buhari Proposes VAT Increase

By Ufuoma Egbamuno

 

In what may be seen as cheery news for millions of Nigerians, the Federal Government has exempted staple food commodities such as bread, rice, eggs, yam etc. from the proposed Value Added Tax (VAT) increase.

 

President Muhammadu Buhari made this known when he presented the 2020 Budget Proposal to a joint session of The National Assembly in Abuja today.

 

President Buhari told legislators that a Finance Bill will be “accompanying the 2020 Budget Proposal” for the National Assembly’s “consideration and passage into law.”

 

“The draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate,” Buhari said.

 

Many Nigerians expressed their displeasure some weeks ago when the proposed VAT increase was first mooted. However, President Buhari insists basic food items will be exempted from the proposed VAT increase.

 

Hear him: “the VAT Act already exempts pharmaceuticals, educational items, and basic commodities, which exemptions we are expanding under the Finance Bill, 2019. 

 

Specifically, Section 46 of the Finance Bill, 2019 expands the exempt items to include the following: brown and white bread; cereals (including maize, rice, wheat, millet, barley and sorghum), fish of all kinds, as well as, flour and starch meals.”

 

Other items listed by President Buhari include fruits, nuts, pulses and vegetables of various kinds; roots such as yam, cocoyam, sweet and Irish potatoes; meat and poultry products including eggs; milk; salt and herbs of various kinds; natural water and table water. 

 

Meanwhile, President Buhari says the new Finance Bill aims to bring “incremental, but necessary changes” to the nation’s fiscal laws. According to the him, the bill has five strategic objectives which he lists as: “promoting fiscal equity by mitigating instances of regressive taxation; reforming domestic tax laws to align with global best practices; and introducing tax incentives for investments in infrastructure and capital markets.”

 

Other objectives according to the President includes: “supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and raising revenues for government.

 

President Buhari also adds that while his administration is committed to intensifying revenue generation, the government “remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms.”

 

The 2020 budget is expected to have an aggregate expenditure of N10.33 trillion. The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers).