The Federal Government has projected an average of N120 trillion in Nigerian consumption expenditure on which value-added tax will be levied between 2023 and 2025.
This is according to the Ministry of Finance, Budget, and National Planning’s Medium Term Expenditure Framework and Fiscal Strategy Paper.
After adjusting for exemptions, zero-rated items, and companies whose turnover falls below the N25m threshold, the report predicts that consumption expenditure on which VAT will be charged will rise from an average of N35tn in 2023 to N40tn in 2024 and N45tn in 2025. This means that the three-year consumption expenditure will be N120 trillion.
Former Vice-Chancellor of the University of Uyo and Professor of Economics and Public Policy, Akpan Ekpo, in an exclusive interview with The PUNCH noted that if the consumption expenditure being forecast hovered on the consumption of capital goods, then it was good news.
“There is nothing wrong if consumption is increasing, especially if we are also producing. The truth is that consumption might increase because most of it is imported goods. Otherwise, consumption is of two types: Household consumption and government consumption, which is made up of consumption for salary payment and consumption of capital goods.
“If capital goods are the consumption expenditure being projected, then it is good because that means the government is paying for capital projects.”
Ekpo explained that Nigeria was an import-based country and a possible increment in consumption might also mean trouble for the economy.
“But if the consumption is for goods which I suspect, then the constant increase will be bad for the economy. We need to produce and consume what we produce domestically.
“Nigeria is a consuming economy and projecting the increment is not good for the economy. We should lay more emphasis on production.”
