By Felix Onuah
ABUJA, Sept 12 (Reuters) - Nigeria plans to increase
value-added tax on goods, the finance minister said, as Africa's
biggest oil exporter seeks to reduce its reliance on crude
sales.
Zainab Ahmed, addressing journalists late on Wednesday after
a cabinet meeting, said the government proposed raising VAT next
year to 7.2% - up from 5%. The current level is one of the
lowest in the world.
The planned rise must be approved by parliament before it
can become law.
President Muhammadu Buhari's government has repeatedly said
it wants to boost non-oil revenues since oil sales make up 90%
of foreign exchange receipts. Raising more money from taxes has
proved difficult in a country where so many small business are
not registered.
Ahmed said the cabinet approved the proposed VAT rise when
it met on Wednesday.
"This is important because the federal government only
retains 15% of the VAT, 85% is actually for the states and local
government. The states need additional revenue to be able to
meet the obligations of the minimum wage," she said.
Nigeria's minimum wage was increased in April to 30,000
naira ($98) a month from 18,000. Prior to the minimum wage rise the government had argued
that many of Nigeria's 36 states struggled to pay salaries of
state employees.
The proposed VAT hike is part of a broader drive to increase
tax revenues. Last week Nigeria's tax chief told Reuters 5.32
trillion naira ($17.39 billion) was collected in taxes in 2018
and his office was targeting 8.9 trillion naira this
year.