The Organised Private Sector of Nigeria (OPSN), comprising the Manufacturers’ Association of Nigeria (MAN) and the Nigeria Employers’ Consultative Association, among others, has expressed its opposition to any attempts by the Federal Government (FG) and other tiers of government to introduce new taxes or levies.
Mrs Zainab Ahmed, the Minister of Finance, Budget and National Budget had on Monday said the ministry “is closely studying” the possibility of introducing new taxes, tariffs and levies as part of measures to shore up government revenue.
The OPSN said the introduction of new taxes or levies by the federal, state and local governments would lead to an upsurge in the country’s unemployment rate with its attendant socio-economic consequences as it could trigger job losses and companies’ closure.
The presidents of the OPSN, in a press address on Tuesday on the state of the Nigerian economy and a call for urgent action, commended the various efforts by the government at all levels to return the economy to the path of consistent growth.
In the address, which was delivered by the group’s Chairman, Mr Taiwo Adeniyi, the OPSN said, “While the pressure on revenue continues in the short term, we vehemently oppose any attempt to further burden organised businesses in the guise of new taxes or levies at the three tiers of government.
“Doing so will be counterproductive as this could further stifle the already burdened businesses, most of whom currently operate at less than 50 per cent capacity utilisation. It will also further lead to an upsurge in the unemployment rate with its attendant socio-economic consequences.”
The group called on the National Assembly not to accommodate or insert provisions that could further burden organised businesses into bills presented to it.
It said, “We wish to specifically draw the attention of the National Assembly to the ‘Establishment of the Tertiary Hospital Development Fund Bill 2021’, which among other things, seek to impose a one per cent tax on businesses. Organised businesses are currently providing healthcare services for the staff through in-house hospitals, HMO providers or direct billing.
“It is unreasonable and will be an over-kill to still saddle the same organisations with the task of contributing to infrastructural development in the healthcare sector. Businesses are currently paying various percentages of their revenue to the NSITF, ITF, PenCom and other government agencies.”
On the Customs bill, currently undergoing public hearing at the National Assembly, the OPSN said NECA and other arms of the group had sent position papers, with their representatives are also attending the public hearing to make the presentation.
The group raised concerns over Clause 25 (advanced ruling) of the bill, saying, “This provision acknowledges an advance ruling in the Customs Framework in Nigeria. However, the application procedure for the advance ruling would be done for a fee.
“Ruling to be delivered within 150 days and lasts within the fiscal year of issue and can be revoked upon reasonable notice. This means that businesses would incur fees for rulings and the rulings will be valid for one year and must be renewed yearly.”
The OPSN recommended that the ruling should be valid for five years, saying, “In the worst-case scenario, the service can adopt the European Union Binding Tariff Information procedure, which is valid for three years.”
It said, “We noted that the Amendment Bill seeks to extend of recovery of unpaid duties from one year to seven years. Customs debt cannot be collected after seven years. However, this provision may be set aside in the event of a criminal allegation. This implies that a business can be exposed to unpaid customs and excise duties for a period of seven years and beyond seven years in the case of a criminal offence.
“We recommended that the provisions in the Customs and Excise Management Act 2004 should be retained, which is one year.”
The organised private sector urged the government to jettison the idea of reintroducing the excise duty on carbonated drinks.
It noted that in 2009 during the global financial crisis, excise duties on carbonated drinks were suspended to aid the sustainability of businesses.
“However, we are concerned that the Federal Government recently made pronouncements on reintroducing the excise duty on this class of products,” it said, adding that the economic situation that necessitated its suspension in 2009 had not abated.”
“Globally, at a time when governments continue to provide incentives for industries to speed up recovery from the shocks of the COVID-19 pandemic and escalating costs, Nigeria cannot afford to be doing the exact opposite as manufacturers, across all product segments, need a respite, especially in the light of the unprecedented increase in production and operating costs.”
Meanwhile, an Executive Committee member of MAN Council, Ibrahim Usman, said the proposed increase in taxes and tariffs was ill-timed, adding the Federal Government should rather cut down the cost of governance instead of imposing more burden on companies.
He said, “Times are hard, it is only when people have managed that they can pay taxes, now, when you look at higher tariffs, we are not even getting what it is for, is it for electricity? Is it for water? Is it for telephones?”
