Why reversal of VAT to 5% will ameliorate impact of COVID-19 on businesses – NECA

Nigeria Employers’ Consultative Association (NECA) has said that it believes a reversal in the current Value Added Tax (VAT) from 7.5 per cent to initial five per cent will ameliorate the impact of COVID-19 on businesses and save the economy from further collapse.

The association’s President, Mr Taiwo Adeniyi, during the Quarterly Economic Review at the NECA House in Ikeja, urged the Federal Government to adopt the measure, stressing that it will also curtail the imminent job loss after Covid-19.

“We wish to state with concern that organized businesses was basically left in the lurch to weather the challenges alone.

“With many businesses closed down and many others on the verge of bankruptcy, we had urged government to give attention and support to businesses to ensure their survival and competitiveness.

“With unemployment rate soaring high pre-COVID-19 and reaching an alarming rate during the pandemic period, it was expected that necessary Job Retention Scheme as proposed by our Association would be given adequate consideration; this was never the case. As full economic activities are on the brink, we, once again, urge the government to take a second look at long term strategic support for organized businesses to enable an accelerated and sustained economic recovery.

Adeniyi said the effects of the various restrictions on businesses prompted the Federal Government to introduce fiscal and monetary measures to ameliorate the impact on businesses and save the economy from further collapse.

He, however, commended the government on the N50 billion credit to household and Small and Medium Enterprises (SMEs)

“Worthy of commendation is the Central Bank of Nigeria (CBN) N50 billion credit facility to households, and Small and Medium Enterprises most affected by the pandemic, as well as N100 billion loan to the health sector, and N1 trillion to the manufacturing sector. In addition, the interest rates on all CBN interventions programmes were revised downwards from nine per cent to five per cent and a one-year moratorium was introduced, effective March 1, 2020.”