•Says heavy taxes’ll displace private sector
By Chukwuma Umeorah
The Nigeria Employers’ Consultative Association (NECA) has expressed concerns over the newly introduced Fiscal Policy Measures (FPM) and Tariff Amendment for 2023, scheduled to take effect from June 1, 2023.
The Director-General of NECA, Adewale-Smatt Oyerinde, noted that the circular by the Minister of Finance, Budget and National Planning Zainab Ahmed, introducing the FPM and Tax Amendment, with increases ranging from 20-100 percent on previously approved rates for alcoholic beverages, tobacco, wines and spirits was not only worrisome, but a landmine for businesses in the sector.
Oyerinde also faulted the introduction of Green tax, a 10 percent excise duty on single use plastics, including plastic containers, films & bags and telecommunications tax of 5 percent.
According to him, “While the government’s new fiscal policy measures would largely affect manufacturers, it also has the potential to disrupt the whole Organised Private Sector’s (OPS) value-chain, with consequential effects on Nigerians as a whole”.
Giving further insights into the concerns of organised businesses, the NECA boss stated that “while we understand the revenue challenges faced by government,its proposed increases will naturally spike the cost of production and reduce the competitiveness of Nigerian manufacturers in both local and international markets. With recent reports of unemployment rate hovering at over 40 percent, the Nigerian economy will be further hard-pressed to withstand the likely loss of jobs that will follow these increases.”
He lamented that with over sixty different taxes and levies currently being paid by Organized Businesses and about 20 bills pending at the National Assembly with financial implications for businesses, the best that government could do was not to over-burden the sector or cause the relocation of many more to other climes. “The FMP, as proposed will neither promote economic growth nor achieve the long-term revenue projection of Government.”
While calling on the Federal Government to suspend the implementation of the newly introduced fiscal policy measure, he urged them to maintain status quo of no excise increase, other than as prescribed in the 2022 FPM.
“Government should, as a matter urgency and national importance suspend the implementation of the Fiscal Policy Measure and Tariff Amendment as currently proposed and revert to the 2022 Fiscal Policy Measure roadmap, built to expire in 2024, while extensive consultation with Organized Businesses is stepped up.”
NECA also expressed concerns at the policy inconsistencies of recent years, which has is largely responsible for the continued slump of Foreign Direct Investment to Nigeria as the country recorded only $1.06 billion in capital importation in the fourth quarter (Q4) of 2022. This brought total capital importation for the 2022 fiscal year to $5.33 billion, the lowest since 2017.
“A major factor is government’s seeming policy inconsistencies, which makes planning difficult. Beyond these consequences, the proposed increases, if implemented could aggravate smuggling, stifle growth of businesses in the sector, promote the production of fake products, reduce the purchasing power of Nigerians and ultimately reduce Government’s projected revenue across board,” he explained.