For any administration to be named a success, it must put together policies that are people centred. And tax can play a major role in this regard; BENJAMIN UMUTEME writes.
Burdened by various multiple taxes that were choking life out of them, it seemed the cry by Nigerians and businesses was finally heard when on Thursday; President Bola Ahmed Tinubu signed four executive Orders (Eos) into law.
Experts say part of the President’s plan is to ease the burden on Nigerians, businesses and partly make investing in Nigeria a worthy endeavour.
At his inauguration, President Tinubu had promised to revamp the economy through business-friendly policies. For small businesses, the administration says it will enable access to single-digit loans “within the shortest time feasible.”
And the President has been true to his words.
Announcing the policy directive last Thursday in Abuja, Special Adviser, Special Duties, Communication and Strategy, to the President, Dele Alake, among the Executive Orders signed into law by the President, are the Finance Act (Effective Date Variation) Order, 2023, which has now deferred the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023. This is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
The second Order involves the Customs, Excise Tariff (Variation) Amendment Order, 2023.
Alake said this has shifted the commencement date of the tax changes from March 27, 2023 to August 1, 2023 and also in line with the National Tax Policy.
He further said the President has given an Order suspending the 5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.
“Further to his commitment to creating a business-friendly environment, the President has ordered the suspension of the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles.
“In addition, the President has ordered the suspension of the Import Tax Adjustment levy on certain vehicles.
“As a listening leader, the President issued these orders to ameliorate the negative impacts of the tax adjustments on businesses and chokehold on households across affected sectors.
“His Excellency will not exacerbate the plight of Nigerians,” Alake stated.
‘Reduce impact’
Analysts say the Orders couldn’t have come at a better time as it would reduce the negative impacts of various tax adjustments on businesses and households across the affected sectors.
At a time when many businesses are contending with rising costs, falling margins and capacity underutilisation due to the various macroeconomic headwinds, the Tinubu led administration hopes to give taxpayers and businesses reasonable time to adjust to the new tax regime.
For the President of the Telecommunications Association of Nigeria, Tony Emoekpere, “It is encouraging to see that the presidency is taking action in that regard (multiple taxation)…We hope that at some point in time, the policy will be totally reversed.”
This was quickly followed with the approval for the establishment of a Presidential Committee on Fiscal Policy and Tax Reforms.
Also, the Chairman of ALTON, Gbenga Adebayo, commended the President saying it is a good development for telecoms subscribers and the industry.
According to Adebayo, it was one of the 39 taxes imposed on telecoms operations across networks.
Adebayo said, The Nigerian public should be grateful to the current government for being brave enough to suspend the five per cent excise duty on telecoms.
“As operators, we had been instructed to collect that tax from telecoms subscribers and remit it to the federal government, but with the suspension order, operators will no longer collect such tax and the subscribers will be free from the tax burden.”
Also speaking, Director-General of Nigeria Employers’ Consultative Association (NECA), Mr. Adewale-Smatt Oyerinde, commended the intervention by Tinubu through the new executive orders.
“We are, indeed, elated with the news of the executive orders, particularly with the suspension of the 5.0 per cent excise tax on telecommunication services; suspension of excise duties on Tobacco (30 per cent ad valorem rate with the introduction of specific rate of N4.2 per stick of cigarette for 2022; N4.7 per stick for 2003; and N5.2/stick in 2024); Beer (N40/litre in 2002; N45/litre in 2023 and N50/litre 2024); and Wine/Spirit (20 per cent ad valorem rate with a specific rate of N50/litre in 2022) as proposed in the 2022 Fiscal Policy Statement.
“The suspension of 10 per cent green tax by way of excise tax on Single Use Plastics (SUPs) including plastics containers and bottles; Import Tax Adjustment (IAT) of 2.0 per cent on imported motor vehicles of 2000 cc to 3999 and 4.0 per cent on 4000cc engines,” Oyerinde said.
Nigeria’s first professor of the Capital market at the Nasarawa State University, Uche Uwaleke, told Blueprint that the Executive Orders are a welcome development as they will no doubt enhance the business environment and consequently improve the country’s ranking in the Ease of Doing Business.
According to Uwaleke, “The suspension of the proposed import tax adjustment levy on certain vehicles and the Excise tax on telecommunications and other locally manufactured products will help to moderate the rising inflation and increase productivity.
“Also, the Finance Act Variation Order 2023 is equal in order to enable taxpayers to adjust to the new provisions in line with the National Tax Policy.
“Much as these developments will help moderate rising inflation, more measures with direct impact on the population need to be put in place in order to significantly ameliorate the adverse consequences of the fuel subsidy removal. These should include the immediate roll out of palliatives promised by the government,” he said.
Correcting past mistakes
Political economist Adefolarin Olamilekan noted that the Tinubu administration really understands the problems of multiple taxations and that was why such a decision was delightful to business owners locally and prospective foreign investors.
Again, in retrospect, the last administration was carefully looking for alternative not solution to our deflecting revenue numbers particularly at the point the nation went through consecutive recessions. And the urgency was economic diversification that considered the non-oil sector, but was biased toward taxations as instruments of fiscal stability.
However, as noble as it were, it runs against the economic target of encouraging business and manufacturing expansion.
“So the Tinubu government cautiously suspended the finance act implementation date and others as a way of correcting what could defeat its economic renewed hope agenda.
Engendering economic growth
Adefolarin noted that the Eos were good for the country noting that the government must be sincere and tread carefully not righting one wrong with another one.
He urged the government to consider infrastructure development as a critical component for engendering economic growth.
“And we suggest it considers a multi sectoral approach in getting this done. For instance, we can’t reduce inflation with monetary policy alone; it has to be a mixture of trade, fiscal and monetary policies that would help in the long run. The same goes with getting over food insecurity without tackling bad roads, banditry, activities on middlemen and sabotaging individuals at the corridor of food stations in our rural areas including collaborations with sub-national governments on security.
“Added to this, there is a need to checkmate the current bank interest lending rates that is discouraging to investors. The easiest way to redefine our business environment requires greater support to SMEs and larger businesses.
“Another is to find a lasting solution to energy cost, petrol, diesel, kero, gas and electricity. We acknowledged the fact that alternative sources such solar, biofuels, wind speed, are with ours.
Regrettably, they are very expensive which make it possible and compelling that our current hydro, thermal and gas plants are very much what cannot but revival to power our economy.
One critical action is to work the talk, show leadership and integrity.
“Nigeria’s economy cannot continue to be on the table of poor policy implementation as it has brought the economy to a standstill.
Hence, the government must deal with issues to address lopsidedness in government engendering positive economic growth in the country.
