FG Rakes in N1.36tn on Product Taxes in Six Months – NBS
Taxes on products in the country rose to N1.36tn in the first six months of 2023 despite worsening hardship across the board according to the NBS.
This is a 113.29 per cent increase from the N636.19bn it was in the first six months of 2021, and a 25.00 per cent increase from the N1.09tn it was in the corresponding period of 2022. These figures were obtained from the National Bureau of Statistics (NBS) data on Net Indirect Taxes on Products and are based on current basic prices.
When adjusted for inflation, the taxes on products amounted to N465.94bn in the first six months of 2023, a 34.98 per cent increase from the N345.19bn it was in the first six months of 2021, and an 11.94 per cent increase from the N416.23bn it was in the corresponding period of 2022.
According to the World Bank, net indirect taxes (taxes less subsidies on products) are the sum of product taxes less subsidies. It stated that product taxes are taxes payable by producers as they relate to the production, sale, purchase, or use of the goods and services.
The country’s Gross Domestic Product grew by 2.51 per cent (year-on-year) in real terms in the second quarter of 2023. This was lower than the 3.54 per cent recorded in Q2 2022 and the NBS suggested this may be because of challenging economic conditions being experienced
With the global economic downturn affecting revenue, the Federal Government has been ramping up its tax efforts. In its 2023-2035 Medium Term Expenditure Framework and Fiscal Strategy Paper, the revealed how it would improve its revenues.
It said, “These measures include improving the tax administration framework, including tax filing and payment; as well as introduction of new and/or further increases in existing pro-heath taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”
The rise in product taxes year-on-year is despite falling purchasing power in the country with inflation hitting 22.79 per cent in June. According to the World Bank, the loss of purchasing power from high inflation has increased poverty and pushed about four million Nigerians into poverty between January and May 2023.
Inflation is expected to continue to rise and is predicted to hit 25 per cent by 2023. The global bank said, “Headline inflation is expected to rise from 18.8 per cent in 2022 to 25 per cent in 2023.”
Meanwhile, the International Monetary Fund has been advising Nigeria to raise its VAT rate to 15 per cent by 2027, which could further increase the amount generated from product tax and increase the prices of products.