• Warns Governors Against Abuse Of VAT Increase Revenue
Amidst public outcry against the increasing cost of fuel subsidy to the economy, the Senate has disclosed that, until the nation can boast of fully functional refineries, the subsidy would not be removed.
The disclosure is in sharp contrast to the upper chamber’s earlier position, when in 2019 it condemned the lack of transparency in the management of subsidy regime.
It had also flayed the payment of N11tn to oil marketers as subsidy in the last six years and stressed that the development, if not halted, could kill the nation’s economy.
International financial institutions like the World Bank and the International Monetary Fund (IMF) had consistently urged government to cut costly national subsidies and to provide them in a targeted fashion to poor communities.
According to the World Bank, subsidies “impose a heavy fiscal burden and are likely not sustainable. These subsidies disproportionately benefit high-income households. So, they are a costly way to protect the poor.”
The immediate past Senate President, Bukola Saraki, had alleged that the Federal Government’s claim of paying subsidy on the 50 million litres of fuel being consumed by Nigerians daily was a big fraud.
He said: “One of the areas we labeled the Goodluck Jonathan government as a corrupt was on the issue of fuel subsidy. The assumption then was that the Federal Government was paying subsidy on the 30 million litres of fuel being consumed daily by Nigerians. All statistics have shown, even now, that it is not possible for Nigerians to consume that much daily.
“A government that is claiming to be fighting corruption is now telling us we are consuming 50 million litres of fuel per day. It is not possible. The National Assembly has investigated the Nigerian National Petroleum Corporation’s (NNPC) claims, but our efforts have been frustrated because agencies of government under the current government have been emboldened to disregard the National Assembly…”
But briefing journalists on the state of the nation’s economy, yesterday in Abuja, the Senate, through its Finance Committee Chairman, Solomon Olamilekan, said: “We agree that we need to find a way by which we can tackle this issue of fuel subsidy. I can imagine if the money used in paying for fuel subsidy can be withdrawn and used to implement the budget. You should also understand the constraints that are there. We need to put our refineries to work. They need to be functioning before we can consider removing fuel subsidy. If we proceed and carry out any urgent or immediate removal, we will be bringing untold hardship to Nigerians…”
The Senate cautioned governors against abusing the revenue accruing to their states from the recent increase of the Value Added Tax (VAT) from 5 percent to 7.5 percent.
The Senate disclosed that over 80 percent of revenues from the increase in the VAT rate would go to the states.
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