BY Suleiman Umaru
There have been mixed reactions to President Bola Ahmed Tinubu, of the ruling All Progressive Congress, APC, singing of four Executive Orders on Thursday, July 6, 2023, that had resulted in the suspension the much criticised five percent Excise Tax on telecommunication services, Green tax, escalation of tax on locally manufactured products and import adjustment tax and levy on imported vehicles into the country.
The Leadership of the Manufacturers Association of Nigeria, MAN and theNational Association of Chambers of Commerce, Mines and Agriculature, NACIMA had fought Hajia Zainab Ahmed, former minister of Finance, Budget and National Planning during former President Muhammadu Buhari’s to get a reprieve but that was how far they could go.
MAN and NACIMA were said to have pushed for the former Katsina state born Nigerian President approved implementation of the 2022 Fiscal Policy Measures made up of the Supplementary Protection Measures, SPM, for the implementation of the Economic Community of West African States, ECOWAS, Common External Tariff, CET, 2022-2026 and the excise duties on non- alcoholic beverages, alcoholic beverages, Cigarettes and Tobacco products to be reviewed.
The aggrieved MAN and NACIMA,, Leadership, were said to have also battled the former minister of Finance, Budget and National Planning to get the Nigerian President to remove the five percent tax imposed on telecommunication services which the Nigerian Customs Services, NCS, had started collecting from the companies since April 2022.
The minister may have used her position and close contact with the then President to get the five percent tax on telecommunication services removed in March 2023 .The then Nigerian President may have acted under pressure from the party Chieftains to get the five percent tax on telecommunication service removed to win the February 25,2023, Presidential elections. The AC, won the Presidential election.
The APC, having won the election may have brought out the real behavior of Buhari, as a Major General Buhari, rtd, and a –one time Nigerian military Head of State to reintroduce the five percent tax on telecommunication services and the escalation of taxes on locally manufactured products, towards the tail end of the Administration.
The former Nigerian President may have expected Tinubu, the former Lagos state governor and his political ally and successor to continue the implementation of the harsh economic policies of the Administration and even increase the five percent tax on telecommunication services and other taxes. He got it wrong.
The former Lagos state governor who is in a hurry to unfold more economic reforms that would remove all the bottlenecks to investments in the country as well as encourage the existing companies in in the manufacturing and service sectors in the economy to do their business with ease. Recall that the Buhari had introduced import adjustment levy , IAT, with additional taxes and levy on 172 tariff lines of the extant ECOWAS CET.
The Leadership of MAN and NACIMA who could not hide their feelings had commended the present Nigerrian president for suspending the five percent tax on telecommunication services and Excise factories duty payments, the Green tax, being collected by the NCS, in the guise of Excise duties and thethe suspension of the IAT.
Segun Ajayi-Kadir, Director General, MAN, had said that the suspension of the various business impediment taxes is worthy of commendation, showing that the President took into consideration their concerns to have put paid to the anxieties of Manufacturers scattered all over the country in the affected sectors of the economy , particular, in in the expansive value chain in general.
Kadir had said that the suspension of the obnoxious aspects of the 2023, fiscal policy, which had arbitrarily imposed an additional tax burden on manufacturers , is ‘’a welcome development and has removed the looming clog in their operations and productivity’’. Hear him: Manufacturers in the affected sectors of the economy are pleased and can now connect with our projections and plans made at the beginning of the year.
Kadir had said that the pursuit of tax increments as enunciated in the 2023 Fiscal Policy Measures which was initiated by the erstwhile Buhari’s Administration was ‘’inimical to the growth of the nation’s manufacturing sectors of the economy but happy that the situation has changed for good.
This is evident going by what Mcebisi Jonas, the Group Chairman of MTN, one of the Telecommunication companies operating in Nigeria, had said that the company had a plan of investing $3.5 billion in the nation’s economy over the next five years, with a broader vision of becoming a Pan- African company by moving investments from theMiddle East and focusing more on Africa, particular, Nigeria, where’’,it gets the highest return on investment’’.
Jonas, who had visited the Nigerian President last Friday with his Team, comprising of Ralph Mupita, Chairman, MTN, Nigeria, Earnest Ndukwe, former Chairman, Nigerian Communications Commission, NCC, and Olutoku Karl Toriola, the Company Chief Executive Officer, CEO, was said have also promised to support the mobilization of other investors with about $1.5 trillion to look towards Nigeria, where economic ‘’reforms had been styled to favour business and encourage inclusive development.There is no gain saying the fact that other telecommunication companies may follow the foot step of the MTN, to increase their investments in Nigeria.
kadir,the MAN , Director General had earlier appealed to the Wale Adeniyi led Nigerian Customs Service, NCS, to stand down ‘’ the requirements for compliance with excise duties escalation and the registration for the green tax to enable businesses to grow in Nigeria.
There are 40 Excise Factories, alone in Ogun, home state of former President Olusegun Obasanjo, and several other excise factories scattered in other states of the Federation, including Lagos state, where critical products are manufactured.
Investigation by The Value News shows that out of the 40 Excise Factories in the Obasanjo home state, 11 are said to be undergoing documentation as 10 others are moribund as they could not cope with the escalating taxes on manufactured products , leading to high cost of production and low demand for their products.
While, MAN and NACIMA, officials, are happy over the suspension of the obnoxious aspects of the 2023, Fiscal policy suspending the five percent tax on telecommunication service, five percent Excise factories duties on locally manufactured products as well as halts on the import adjust taxes and levy on certain imported vehicles into the country,, Taiwo Oyedele, a fiscal policy partner at Price Waterhouse Coopers, thinks differently.
Oyedele had urged Nigerians not to celebrate over the suspension of the five percent telecommunication services, five percent Excise factories duty payment , Green tax or halts in the import adjustment levy on certain imported vehicles into the country.
The Monetary Policy analysts had said that the Nigerian President has done this to give Nigerians a temporary breather as ‘’they won’t have to pay more for telecommunication services or some critical goods’’ for now. He was emphatic: it will ease the burden that the ordinary Nigerians bear at this time and would not be further complicated or worsened by additional taxes in the years ahead.
Oyedele, had said that Nigerians are made to pay more for all those products like plastic bags, plastic bottles , among others because of the way they are packaged which was said to have added to the high inflation of the manufacturing companies in the country and which had to be passed to the consumers , nothing that this is what the previous Administration could have prevented but failed to do so.
For rubbishing the suspension some of the taxes introduced and implemented in the 2023 Fiscal policy. Which the Nigerian President had said was meant ‘’to remove all barriers impeding business growth in Nigeria, particular, the suspension of the5% Excise factories duty payment may have informed why the Nigerian President has appointed Oyedele to be the Chairman of the newly established Presidential Committee on fiscal policy and tax reforms on Friday , June, 7, 2023 to come and show his expertise.
Alake, the Media Aide to the President had said that members of the Committee are drawn from both the Organised Private Sector, OPS, and the public sector , stressing that the Committee has been mandated ‘’to take a look at the various aspects of tax reform , fiscal policy design and Coordination , modernization of taxes and revenue Administration and come out with a recommendation that would improve the country’s tax Administration in the country.
Adelabu Zach Adedeji, the President’s Special Adviser on Revenue, may have given the Oyedele led Committee a clue on how to go about their assignment by stating that the key challenges in Nigeria tax system include ‘’the multiple taxes by the revenue collection agencies, fragmented and complex tax system, low tax morale, high prevalence of tax evasion, high cost of revenue Administration, lack of Coordination between fiscal and economic policies and poor accountability in the utilization of tax revenue’’.
The Presidential Aide on Revenue, would want the Oyedele Committee’’ to address the challenges and bringing about a more transformative reforms in the country’s fiscal policy and taxation. Adedeji, who could not hide his feelings has made it clear those that cares to listen that ‘’ the primary objective of the Oyedele Committee is to enhance revenue collection efficiency, ensure transparent reporting and promote the effective utilization of tax and other revenue collected by the relevant agencies to boost citizen’s tax morale, foster a healthy tax culture and drive voluntary compliance’’.
He is optimistic that’’ if the Committee could achieve all that, it would not only improve the country’s revenue profile, which had been on the low side over the years but also create a more conducive and internationally-competitive business environment’’. This is where Oyedele has to prove that he can deliver on his mandate rather being an arm chair critic.