The organised private sector on Thursday welcomed the tax suspensions announced by President Bola Tinubu, noting that they showed the Federal Government was sensitive to the challenges facing businesses and citizens.
The private sector operators however pointed out that the tax suspensions were inadequate to curb rising inflation and other macroeconomic headwinds threatening the survival of many local businesses.
They, therefore, asked the President to implement additional tax waivers and incentives in order to reduce the high cost of doing business, address rising inflation and tackle the various economic challenges affecting businesses.
The Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industry, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, made this known while reacting to the tax suspensions by the Federal Government.
Tinubu had earlier on Thursday in Abuja, signed four Executive Orders, suspending the five per cent excise tax on telecommunication services and the excise duties escalation on locally-manufactured
Special Adviser to the President on Special Duties, Communications and Strategy Dele Alake, announced the development while briefing State House correspondents at the Presidential Villa, Abuja.
Others on the team were Special Adviser to the President on Revenue, Mr Zacchaeus Adedeji; a member of the Presidential Advisory Council on Finance and Other Related Matters, Ms Doris Aniettie; and Adenike Laoye from the Office of the Chief of Staff to the President.
According to the team, the move is to ensure that the Act aligns with the 90-day notice period required by the National Tax Policy 2017.
Tinubu also signed the Customs Excise Tariff (Variation) Amendment Order, 2023, shifting the commencement date of the tax changes from March 27, 2023, to August 1, 2023, in line with the National Tax Policy.
He also ordered the suspension of the newly introduced Green Tax through the Excise Tax of Single-Use Plastics, including plastic containers and bottles. Likewise, he suspended the Import Tax Adjustment levy on certain vehicles.
Alake explained that these orders were meant to reduce the negative impacts of the tax adjustments on businesses and households across the affected sectors.
However, he reiterated the President’s commitment to addressing complaints about multiple taxation and other related challenges facing business.
He noted that the Tinubu administration would continue to give requisite stimulus through friendly policies to allow businesses to flourish nationwide.
The President assured Nigerians that there would not be further tax raise without robust and broad consultations within a coherent fiscal policy framework.
According to him, the President intends to listen to the concerns of the Nigerian people and alleviate the negative impacts of the tax adjustments rather than exacerbate the challenges facing citizens.
He said, “The President wishes to reiterate his commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions.
“The Federal Government sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and an appreciable reduction in the unemployment rate through job creation.
“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.”
Alake added that President Tinubu wishes to assure Nigerians, by whose mandate he is in power, “that there will not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.”
Some of the problems identified with the tax changes include the 2017 National Tax Policy approved by President Muhammadu Buhari’s administration, prescribing a minimum of 90 days’ notice from the government to taxpayers before any tax changes can take effect.
The presidential aide explained that “This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime.
“However, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted.
“As a result of this, many of the affected businesses are already contending with the rising costs, falling margins and capacity underutilization due to the various macroeconomic headwinds as well as the impact of the Naira redesign policy.”
He also noted the Excise Tax increase on tobacco products and alcoholic beverages were also being implemented.
Alake noted that the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on certain categories of vehicles, require more consultation and a holistic approach to Nigeria’s net zero plan in a way that does not hurt the economy.
Reacting to a question on whether the President’s action would affect the Petroleum Tax and if new taxes would be introduced, the Special Adviser on Revenue, Adedeji, said that the President’s intent is to lighten tax burdens, harmonise and manage existing taxes in the best interest of Nigerians.
“The pricing structure that you have for PMS today, all those have been included, there’s no new taxes that we’re bringing in.
“One of the key focus of this administration is to harmonise our taxes, the way we collect it. Mr. President actually wants to simplify and make it friendly to businesses, the way we operate taxes in Nigeria.
“As we know, when we talk about the revenue management, it’s not only in tax collection, the starting point is our economic policy because our aim is not to tax poverty. Our aim is not to tax production. Our aim is to increase our productive activities, capacity to produce, then we can tax our consumption and that is the direction of our economic planning,” Adedeji explained.
Reacting, MAN President, Francis Meshioye, described the development as a laudable step and one that would go a long way in easing the tax burden on manufacturers.
Meshioye, however, urged the government to clarify its position on the rate hike on tobacco products which was introduced into the Finance Act.
He added, “It is not clear whether this has been suspended, the taxes on tobacco products. It was mentioned by Alake that the president was conscious of this, but he did not say in clarity whether it would be suspended. Our prayer has been that this should be totally suspended. In the first instance, there was a road map on how the increase will come to play.’’
Also, MAN Director-General, Segun Ajayi-Kadir, said, “The unwarranted and clearly disingenuous escalation of excise and introduction of new taxes in the 2023 Fiscal Policy Measures needed to be discarded and President Tinubu has just done the right thing and we commend him.
“Existing manufacturers in the affected sector are pleased and we can now reconnect with our projections and plans made at the beginning of the year. We are expecting that the Customs will stand down the requirements for compliance with the excise escalation and the registration for the green tax.
“We look forward to further engagements that will give fillip to the new policy measures he has enunciated, so that the challenges that would emerge would be effectively mitigated. For instance, one can see the possibility of inadequacy of forex and a lot of pragmatism is needed to ensure a massive inflow and strategic release.
In the same vein, a statement by the President of NACCIMA, Dele Oye, said, “We urge the Federal Government to continue to engage with stakeholders and implement policies that are business-friendly and promote sustainable economic growth. We believe that the private sector is essential to achieving the government’s goal of higher GDP growth and reduced unemployment rate through job creation.”
Also speaking, the Deputy President of the Lagos Chamber of Commerce and Industry, Gabriel IdahosaIt, described the move as a temporary relief that would provide some breathing space for manufacturers to review their plans to deal with the changes.
He said, “It is in response to the general call on the Federal Government to moderate the pace with which many policy reforms are being implemented. This is to give economic actors reasonable time to adjust to the reforms.”
On his part, the Chief Executive Officer of the Centre for the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, hailed the move.
He said the decision would not only positively affect the manufacturers, but the economy by extension.
He, however, said the Federal Government needed to implement more waivers and incentives to adequately address the effect of the rising inflation on the economy.
Yusuf said, “It is a good development for manufacturers and for the economy as a whole because there is only so much that businesses and individuals can bear. For the president to do this, it means he’s being responsive and sensitive to the current reality especially now that we have the added burden of fuel subsidy removal;
He further urged the government to reverse some of the newly introduced taxes in order to reduce the economic hardship facing many Nigerians.
While speaking, a renowned economist and former Vice-Chancellor of the University of Uyo, Professor Akpan Ekpo, described the decision as one that would be of benefit not only to manufacturers, but the consumers as well.
According to him, the reduced burden of taxes on manufacturers would translate to more stable prices of manufactured goods.
Ekpo said, “It’s good for businesses because it reduced their tax burden. If they’re not too interested in maximising profit then it will impact positively on consumers because it is going to lower prices of goods. It’s a step in the right direction because there were too many taxes on Manufacturers.”
According to the President of the Association of Telecommunications Association of Nigeria, Tony Emoekpere, stated that the move to suspend five per cent duty on the telecoms sector will reduce some of the stress on the industry.
He said, “This is a great move. We have long been complaining about the multiple taxation in the industry and the fact that it is subscribers that bear the brunt of it.
“It is encouraging to see that the presidency is taking action in that regard, and we hope to see more action as regards action towards steering the tide of multiple taxations that is facing our industry. I think it is being reviewed, and we need to let them know what the impact of such move will have on the industry. We hope that at some point in time, the policy will be totally reversed.”
While the National President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, applauded the move, he noted that the association would continue its case against the government.
He said, “This puts it to rest. He is still suspending it though. We are still likely to remain in court to challenge it because it is still a suspension. Anyone can revisit it. Until it is cancelled, we will continue with the case. They should cancel it or repeal it because it has been gazetted already.”