The federal government of Nigeria is keen on making more money even as the country appears to need more revenue streams. Due to sustained shortfalls in revenue and an increase in government spending there is a need to find ‘innovative’ ways to scale up revenue.
The country’s finance minister introduced the strategic revenue growth initiative last Wednesday. By increasing VAT from 5% to 7.5%, the government hopes to make a little more than 2 trillion naira in 2020. This is the government’s way of increasing non-oil revenue.
The Nigerian government has consistently relied on borrowed money to finance its growing funding needs. For an economy that has relied on oil for so long, we need to find other ways to raise money to run the country. However, the announcement by the finance minister has been met with mixed reactions. The important question to ask is “how will this affect the everyday Nigerian?” The proposed increase comes in a time when the nation suffers from the worst form of economic uncertainty. This money will be raised in order to cover the #30,000 minimum wage amongst other things.
Do you think this move is an innovative one or a desperate one? Please share your thoughts.
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