Lets Talk About VAT, What? How? How to boost

But let's go straight into VAT, right? So what is VAT? Before we had VAT, we used to have what was called a sales tax.

If you live abroad or if you live in Nigeria in those olden days, you know what sales tax is, right? Really, most of the stuff you buy, you know, you pay a sales tax on it.

And abroad, it's this differential according to where you are buying or where you are located.

It's collected at a very, very local level.

So if you go to a gas station, you buy gas, you pay sales taxes in that gas station, right? Some states don't even have sales taxes, talking about America.

In Europe and the UK, they have VAT.

That's the key word for you there, consumption.

Because unlike sales tax, where you buy and then you pay, that's a regressive tax.

Because what happens is that if you buy and you earn a million and I earn 10,000, we both pay the same sales tax.

And if you buy and you're a business and you are adding value, you pay the same tax as I'm paying.

But with VAT, it's the final consumer that is paying.

through economic activity.

Simple enough, right? So there's retail, manufacturing, anything that is economic in nature.

You generate a receipt or a transaction.

That transaction is what is being taxed.

In Nigeria, when we fund a system, the VAT at the local level is collected by the federal government, not the local institution.

And the local student shares VAT.

That's another thing that's unique in Nigeria.

We share VAT.

where you have states receiving more VAT that they generate and states paying more VAT than they generate.

So we share VAT.

We have a vertical formula and a horizontal formula.

The horizontal is where we're going to pay particular attention to where I want you guys to really focus on.

Vertical is simple.

Federal gets 10%.