© 2019 - International Centre for Investigative Reporting
Minimal financial burden of 7.5% VAT on NYSC members
CONTRARY to popular belief, National Youth Service Corp (NYSC) members would have a minimal financial burden of the newly implemented 7.5 percent Value Added Tax (VAT).
On October 8, 2019 President Muhammadu Buhari announced that the federal government will reduce the impact of the VAT by expanding the list of items that would be exempted.
Items included in the exempt list are namely; medical and pharmaceutical products; basic food, books and educational materials; newspaper; baby product; veterinary medicine and commercial vehicles.
From the above 7.5 percent tax exempted list an average youth corps member needs varies from medical and pharmaceutical products when sick to commercial vehicle to go to his/her place of primary assignment and daily basic food.
All of which are excluded from the tax increment that an average youth corps member would need for survival throughout their service year.
NYSC staff Gabriel Owolabi who works with the accounts department spoke with The ICIR and said, “Government does not take tax off corps member’s allowances.”
A corps member Racheal Azama, said “I would save more from the new allowance to start up my business in case I don’t get a regular job after the service year.”
A corp member posted to a state to serve would need accommodation and no tax is deducted off renting an apartment.
Tax experts have argued that “If you reduce tax all the benefits goes to the rich because they pay the most tax because of their high earnings.”
Corp members would not heavily feel the impact according to Gbenga Adeniran, a financial analyst at FCMB Financial Capital Market believes that the new VAT will take tolls on commodity buyers. “The more the commodity bought the more the impact is felt, so the big commodity buyers would pay more,” he said.
Corp members are small buyers of commodities and services; an average corps member has little or no responsibility than to cater for him/herself alone
In economics, the higher the tax rate, the more time people spend evading taxes and the less time they spend on the more productive activity.
So the lower the tax rate, the higher the value of all the goods and services produced.
After the announcement of the new minimum wage of N30,000 in October 23, 2019 by the minister of labour Chris Ngige, January 2020 youth corpers received their increment in allowance from N19,800 to N33,000.
They expressed their excitement on various social media platforms on the new allowance.