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The Centre for the Promotion of Private Enterprise (CPPE) has kicked against the decision of the federal government to commence Value Added Tax (VAT) for informal traders.
The Director of CPPE, Muda Yusuf, made this known on Sunday.
Newspot recalls that the Federal Inland Revenue Service (FIRS), in partnership with the Market Traders Association of Nigeria, recently launched the VAT Direct Initiative (VDI) to widen the nation’s revenue net in the informal sector.
Against the backdrop of the VDI, Yusuf said the economies of tax collection do not support the move, noting that over 98 per cent of informal traders are micro-enterprises that do not fall within the threshold of VAT.
Yusuf said the cost of tax collection within the informal sector would be much higher than the amount generated.
He urged FIRS to think of more creative ways of taxing the informal sector that will be cost-effective, less disruptive, and have minimal political cost.
“We advise against the decision of the FIRS to undertake VAT collection in the informal sector.
The FIRS should think of more creative ways of taxing the informal sector players in ways that will be more cost-effective, less disruptive, and with minimal political cost.
“More importantly, the FIRS should adopt the ‘Pareto’ principle of focusing on the few players and individuals who could yield the highest revenue. It is a model appropriate for an economy with a high level of inequality like ours,” he stated.
Meanwhile, last week, President Bola Tinubu suspended the implementation of the 2023 Finance Act, telecoms, imports, and other taxes.
