FG Begins Consultations with States, NASS on Luxury Tax

The Federal Government has commenced discussions with state governments and members of the National Assembly on the framework for the implementation of the planned taxes on luxury items.

The Minister of Budget and National Planning, Senator Udo Udoma, who confirmed this in Abuja, said this was part of measures aimed at ensuring a smooth implementation of the planned tax regime.

He attributed the delay in implementing the new VAT regime to the current consultations, noting that Nigerians would soon know the items to be taxed as luxury goods.

He said since the bulk of revenue from VAT was allocated to the state and local governments, their input was vital for the new tax regime to be successful.

Based on allocation from the Federation Account Allocation Committee, the Federal Government gets 15 per cent of VAT revenue, while the states and local governments get 50 per cent and 35 per cent, respectively.

He said the Federal Government was determined to implement the taxes on luxury items, adding that this would help shore up the much needed non-oil revenue for the country.

Udoma said, “The issue of luxury items has been on for quite some time but the thing about VAT is that it needs a lot of consultation with the National Assembly and the state governments and indeed the bulk of the revenue generated from VAT goes to the states.

“The reason for the delay in implementation is because most of those consultations are ongoing. It’s not easy to agree with everybody on what should be a luxury item and what is essential but we are on it and I accept that really, we should move much faster in terms of implementing that.”

On specific strategies to boost government revenue, he said that the objective going forward was to enhance oil revenues and accelerate non-oil revenues.

This, according to him, will be achieved through transition from the traditional Joint Venture Cash Call budget to the self-funding mechanism.

Udoma added that the government was improving tax and customs administration, including greater deployment of appropriate technology to block revenue leakages.

Others are tightening tax exemptions, including duty waivers, review of the Value Added Tax rate commencing with the luxury items.