VAT increase will worsen economic situation–Gov. Umahi

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Ebonyi State Governor David Umahi on Wednesday said the plan by the federal government to lift Value Added Tax( VAT ) from 5% to 35% to pay salaries will not solve any problem but rather worsen the situation.

According to him, the plan will make things more difficult for Nigerians as it will lead to astronomical increment of goods and services in the country.

He described the alleged plan as digging a hole to fill a hole and therefore called on Organised Labour to sit down with government to consider the plan.

Umahi spoke in his office at government house Abakaliki while addressing the staff of his office celebrating his re-election victory.

He noted that with the proposed plan by the federal government, anyone going to buy something will pay 30% VAT than it used to be.

“I saw in a paper where federal government is considering lifting VAT to 35% to pay salaries.

“It is all about digging a hole to fill a hole because we have not come to point of realisation or honesty about how to solve our problems and it is important.

“Federal government is borrowing money. States have been banned from borrowing money.

“And so, if VAT is lifted from 5% to 35% which means that any of us that is going to buy anything is going to pay 30% than what we have been buying. It is important that labour sits down with government.

“There is no fraud that goes on in civil service that is not being orchestrated by civil servants and if we can plug down the stealing or cut down the cost of projects, we should be able to have enough to cater for civil servants and non-civil servants.

“We are in for deeper problems all over the nations we all sit down and look at the problems and how to solve it.

“No Governor will make magic, no President will make magic. If they give us N2bn and the wage bill is N2bn, you can’t make any magic. You pay only wage bill and then go to sleep.

“No amount of money paid to civil servants can be enough, it is only the one they make themselves that will assist them.

“If you pay somebody in grade level may be 10 N50, 000 by the minimum wage and he goes to hospital, private hospital which bills high because they will pay VAT on the drugs you will pay more in drugs .

“If you go to buy exercise book for your children, you will pay more. You will pay more in everything. So, by the end of the day, civil servants may be crying we should go back to status quo and therefore the increment may not be in the reason.”

He added: “I am not against the increment but when I was talking about the minimum wage, I told you people that federal government was considering doing something to enable them pay, that is raising VAT which is going to tough for the country. All the building materials will have 35% VAT, cement will come up with 35% VAT meaning those who have not built houses will be struggling to build”.

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