FG to raise VAT on champagne, other luxury items

In an effort to shore up the federal government’s revenue base, the Federal Executive Council (FEC) yesterday approved a new tax regime, just as it announced its intention to raise taxes on luxury goods.

The Minister of Finance, Mrs. Kemi Adeosun, disclosed this to State House correspondents at the end of a meeting of the council presided over by Acting President Yemi Osinbajo.

She was joined at the press conference by the Minister of Information and Culture, Alhaji Lai Mohammed; and the Minister of State, Aviation, Hadi Sirika.

Adeosun said while the implementation of the revised policy would take immediate effect, some aspects that required changes in law would be referred to the National Assembly for action.

“At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more.

“Champagne in the UK attracts VAT of 20 per cent, so why should it be five per cent in Nigeria?

“So, they have made recommendations that we should identify some luxury items and increase VAT on those items immediately.

“And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about to see how we can implement it.

“But as far as basic goods are concerned, there will be no increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. But the National Assembly will decide the rate.”