Obinna Odogwu, Abakaliki
Following the passage of the new minimum wage bill by the National Assembly as well as the proposed increment from 5 to 35 per cent of the Value Added Tax (VAT) by the Federal Government, Ebonyi State Governor, Chief David Umahi, has warned Nigerians to get ready to face tougher times ahead.
He said the wage increment and the proposal of the government to jerk up VAT as high as 35 per cent for it to be able to pay the new minimum wage would spread hardship across the country.
Umahi expressed concerns while addressing the members of staff of his office who organised a brief ceremony to celebrate his election victory at the just concluded Governorship and House of Assembly elections in the state.
The governor who described the new minimum wage as “digging a hole to fill a hole” advised the leadership of labour unions to sit down with the government and think through the consequences of the proposed new VAT before it takes effect.
Umahi said: “Today, I saw in the paper where the Federal Government is considering raising VAT to 35 per cent to pay salaries. It is all about digging a hole to fill a hole. We have not come to the point of realisation or honesty about how to solve our problem.
“Federal Government is borrowing money to pay salaries. State is being barred from borrowing money. If VAT is raised from 5 per cent to 35 per cent, it means that any of us going to buy anything is going to pay 30 per cent more than what we have been buying. So, it is important that labour sits down with government,” he cautioned.
Umahi further said: “If you pay somebody in Grade Level 10 the sum of N50,000 by the minimum wage and he goes to hospital, definitely the hospital bill will rise because they will pay VAT on the drugs. So, you pay more. “You go to buy exercise book for your children, you pay more. In everything you pay more. So, by the end of the day, civil servants may be crying that they want to go back to status quo and then the increment may not be the reason. I am not against the increment.
“But when I was talking about minimum wage I told you people that the Federal Government was doing something to enable them pay. And that is raising VAT.”