The Manufacturers Association of Nigeria (MAN) on Thursday warned the Federal Government to drop the proposed VAT rate increment.
MAN said the plan was unfriendly to the manufacturing sector and Nigerian masses.
The Director-General of the association, Segun Ajayi-Kadir, made the remarks in Lagos.
Ajayi-Kadir also said the proposed VAT increment did not take into cognisance the prevailing times and ongoing government efforts to re-invigorate the economy.
The Director-General said that as plausible as the recommendation to increase VAT looked, implementing it at this time would boomerang.
According to him, the timing is inappropriate, especially at a time when the minimum wage of N30,000 was just agreed upon.
“This can send the wrong signals that the government is insensitive to the plights of the low- and middle-income earners, who are clearly in the majority.
“MAN still wishes to state the implication of carrying out such policy, if the alleged proposed increase in VAT is anything to go by.
“It will be seen as a typical case of government simply taking back what was given with the right hand through the National Minimum Wage with the left hand, through increase in VAT,” he said.
Ajayi-Kadir urged the Federal Government not to increase VAT at this point in time, but to consider the implementation of the other tax specific recommendations.
He also advised the government to continue to ramp-up support for the manufacturing sector in the best interest of the over 200 million Nigerians.
The Director-General said that Nigerian economy would be in a more vulnerable state, if VAT should be increased now.
He said that the burden of the tax would be shifted to the Nigerian consumers that were already struggling.
In addition, Ajayi-Kadir said the economy would certainly experience demand crunch, inventory of unsold items would soar, profitability of manufacturing concerns would be negatively impacted, many factories would witness serious downturn or wound down operations.
This would also worsen the already high unemployment position in the country, he said.