According to a copy of the public presentation of the 2023 proposed budget by the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, released recently, the Federal Government plans to introduce more sin taxes and reduce tax incentives in 2023 through the proposed 2022 Finance Bill.
The minister stated in the paper that the sin taxes will be implemented to support crucial healthcare in the country. “Finance Bill, 2022 will propose unique sin taxes to support vital Healthcare Investments,” according to the text.
A sin tax, according to Investopedia, is imposed on particular items and services that are deemed damaging or costly to society. Tobacco, alcohol, and gambling businesses are examples of such commodities and services. Sin taxes are introduced to deter people from engaging in socially harmful activities and behavior while providing revenue to the governmen
Previously, the Federal Government announced, via the Federation’s Budget Office, that it will begin implementing planned excise charges on telecommunications services and drinks in 2023.
However, the Minister of Communications and Digital Economy, Prof Isa Pantami, fought the telecommunications tax, which resulted in its suspension.
Pantami stated that he was opposed to the implementation of this tax, which would raise the cost of communications services for Nigerians, deterring them from utilizing these services, which had become a need for many Nigerians.
Aside from introducing six taxes, the Federal Government plans to phase out tax incentives, such as the pioneer tax waiver. The Federal Government hopes to “gradually transition away from expensive & redundant tax incentives.” the Federal Government gave tax reliefs and concessions valued at N16.76tn to large companies between 2019 and 2021.
As of the end of 2021, 46 companies had benefitted from various tax incentives and duty waiver schemes while the requests of 186 companies were still pending.
Reacting to this, the Managing Director/Chief Executive Officer of Cowry Asset Management Limited, Mr Johnson Chukwu, said that introducing new taxes and cutting down some tax incentives might negatively affect manufacturers and consumers in Nigeria.
He said, “We could see a situation where the manufacturers are unable to pass on those costs and absorb the costs, which will reduce their profitability and even the appetite for further investments. If they are able to pass those costs to consumers, this will be a difficult situation because of the existing weak purchasing power.”
