Mixed Reactions Trail Tinubu’s Suspension Of Five Percent Excise Duty,Taxes

 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.

Kadir: DG,MAN

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.

Oyede: Heads Presidential Committee On Fiscal Policy And Tax Reforms

 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.   

Leave a Reply

Your email address will not be published. Required fields are marked *