The Centre for the Study of Economies of Africa (CSEA) has charged the federal and sub-national governments in Nigeria to improve the nation’s business climate as a strategic option of boosting Value Added Tax (VAT) collection and growing key sectors of the economy on a sustainable basis.
The leading non-for-profit research think tank gave this insight in its latest Nigeria Economic Update Issue 19 sourced by BRTNews.ng on Thursday.
Using the data from the National Bureau of Statistics (NBS) on Value Added Tax (VAT) revenue for the first quarter of 2021 (Q1 2021) to justify its position, the CSEA pointed out that with VAT collections standing at N496.39 billion in the quarter, Nigeria could rake in more VAT if the enabling environment is created for businesses to thrive.
The research firm noted that while the Q1 VAT collections represented 9.17 percent and 52.93 percent increase relative to the previous quarter and corresponding quarter of 2020, respectively, a further dis-aggregation of the VAT accruals showed that other manufacturing and professional services sectors generated the highest VAT during the quarter under review.
According to the CSEA researchers, the sectorial distribution of VAT revenue reflected the growing importance of the manufacturing and service sectors to the Nigerian economy.
To optimize the key sectors’ contributions to VAT and by extension, the nation’s GDP, the research firm stated: “It is therefore important to continuously improve the business climate in the country to enhance the growth potential of these sectors as they are yet to reach their optimal levels.
“Enhancing overall business climate would also attract investments in other less-performing sectors of the economy, which should ultimately lead to more tax revenues to fund much-needed infrastructural projects in the country”, the CSEA added.