Nigerians are increasingly feeling the pressure of Value Added Tax (VAT) as rising prices and a persistent cost-of-living crisis continue to stretch household incomes. Consumers, traders and small business owners say the combination of higher prices, operating costs and taxes is making everyday life more difficult, particularly for low- and middle-income earners.
Although VAT is collected by businesses at different stages of production and distribution, the cost is ultimately reflected in the prices consumers pay. In markets across Lagos and other major cities, traders say frequent increases in the cost of restocking goods have left them with little choice but to raise their own prices, creating even more pressure on already struggling customers.
For many households, the problem goes beyond VAT alone. Food, transportation and other essential expenses are taking up a growing share of monthly incomes, leaving families with less money for other needs. Financial analyst Abayomi Tairu warned that consumption taxes can place a heavier burden on low-income households because they spend a larger proportion of their earnings on basic necessities. He stressed the importance of protecting essential goods through VAT exemptions or zero-rating.
The pressure is also being felt by businesses, particularly small retailers operating on tight margins. Supermarket owner Elias Ifeanyi said customers are buying less whenever prices increase, forcing businesses to balance higher operating expenses with falling demand. Analysts have therefore called for broader tax reforms, stronger social protection programmes, targeted cash transfers and measures to support small and medium-sized enterprises while ensuring the government continues to generate the revenue needed to fund public services.
As Nigerians continue to adjust their spending habits, buying smaller quantities and choosing cheaper alternatives, the VAT debate is becoming increasingly personal for millions of households. While VAT remains an important source of government revenue, the growing concern is how to raise revenue without placing even more pressure on citizens already struggling to make their incomes cover food, transportation and other everyday necessities.
source: punch
