… Demands tax break to encourage exploration, research and development
A former National President of the National Association of Government Approved Freight Forwarders (NAGAFF), Dr. Eugene Nweke has urged the Minister of Finance, Hajia Zainab Ahmed to relax the present policies with the appearances of tax imposition even as he appealed to her to go back to the drawing board, review critical issues and concerns raised in his letter and elsewhere by stakeholders and make adjustments for the sake of the impoverished consuming public.
Nweke who made this appeal in his open letter to the Minister on Tuesday observed that the subtle duty benchmarking of traded goods shipped into the country from late last year was not a function nor inclusive of the government fiscal policy of the year 2021 rather it was a deliberate tax imposition on trade, all in the name of bumper revenue generation without recourse to its attendant consequences to the citizens and the nation’s international trading image.
He further noted that the Introduction of the Vehicle Identification Number (VIN) application on imported vehicles also took the same processes and application above adding that the citizens were still grappling with the consequences of the reactions that greeted the Introduction of VIN without adequate consultation and non observance of experimental processes to this effect.
According to him, “Our findings also showed that your ministry, after revaluation and revalidation of the Common External Tariff, CET, for a new valid period of applications in the updated version, abused the provisions of the general application of the CET which set across board, the applicable duty rate for imported vehicles at 20%, under a compounded HS CODE, but your ministry unilaterally added 15 % NAC levy on imported used vehicles and used parts, just a further effort to retain or sustain the prevailing 35% import duty imposition.
“Findings showed that this decision was taken without various recourse and variables, not even a recourse to the provisions of the NAC enabling Act to the extent that an automobile council levy is above a single digit but two digits levy level. The decision was without concerns to the adverse consequence thereof. Today, another strike actions is being contemplated which is not healthy for our economy in the face of a congested ports.”
The former NAGAFF boss, however, harped on the need for the Honourable Minister to steer the Board of the Nigeria Customs Service (NCS) effectively as the Chairman and watch closely on the activities of the Central Bank of Nigeria (CBN) especially on the aspects of conflicting monetary and fiscal policies applications.
“Most of these fiscal policies being churned out are rather more of imposition without the consent of the legislatures. It must be strongly emphasize that the international trading environment is highly volatile and fragile, our fiscal policies over the years has not achieved its desired objectives owing to applications and associated inconsistencies (more of changing the goal post when the match is on).
“We say this, because it is glaring that the nation ‘s balance of trade is still on deficit even though other contributory factors are responsible but an effective fiscal trade policy is a major contributor because it is the bedrock.
“Going, forward we urge you to lax the present policies with the appearances of tax imposition, then please go back to the drawing board, review critical issues and concerns raised in this letter and else where by stakeholders, and make adjustments for the sake of the impoverished consuming public.
“We pray thee to live above board. With your effective monitoring and superintendent of the Board of Customs, so many trade related issues will be addressed evenly. Do have a positive consideration in this regards for therein lies the much needed services to the fatherland especially when and where your actions or inactions has direct impact on larger populace”, he begged.
Speaking on trade tax policies, Nweke stated that the freight forwarders support that foreign investment should be taxed by the government for the sole aim of serving as an incentive to keep or retain the money here at home arguing that by so doing, it would encourage some foreign entrepreneurs to set up shops or cottages here so as to tap these funds which were tax free if invested in Nigeria.
He added that there should also be more incentive to invest in high tech, manufacturing and exporting business.
“We are aware of a country where a company adheres to the 90% government relaxing rule for investment in small entrepreneurs which is on the basis of dollar-for-dollar and for every dollar an investor put into a small entrepreneur of his country, he can invest a dollar offshore. This type of trade investment policy is desirous in our dear country especially so, in the face of the AfCTA implementation regime.
“Our findings showed that it is easier to argue that, “by government so-called interventions, the Nigerian manufacturers and exporters are not at any tax disadvantage compared to some other similar developing nations manufacturers and exporters.” But the reality is that, our Nigeria manufacturers, exporters and other likened entrepreneurs do not have advantages (a situation where a tax regime waiver is in place but no enabling environment for its prompt utilization), they are limited by some many contending factors of productivity and marketing.
“Ideally, advantages are necessary to offset the fact that Nigeria has such a domestic unstable and unfirmly regulated economy that cannot act as a springboard for the low cost exports. The consequence being that a branch plant and products imports franchise economy under the regime of free trade liberalization scheme merely consists of few foreign owned subsidiaries making profitable amounts on many trading products above the citizens purchasing power average in the markets”, he said.
Nweke who is also the Managing Director of Virtues Marines Limited maintained that the expectation of the freight forwarders was that the NCS Board and its Chairman should appreciate better that other than encouraging and emphasizing more of “Product Import Franchise (PIF)”, it should rather see reasons as to be at the forefront to foster and encourage the Nigerian manufacturers and entrepreneurial plants to obtain “World Product Mandate (WPM)” from their parents, allowing them to specialize, lower their costs and export more goods.
He continued, “We posit so with humility because our manufacturers and entrepreneurs require a restructured huge tax breaks or even tax holidays especially for those manufacturers and entrepreneurs who are export oriented or related.
“Our findings also showed that tax breaks will give rise to criticism from other sectors such as service industries but the good news is that at large, it will ultimately benefits and afford as many major multinationals and manufacturers the access to the World Products Mandates as a viable alternatives. The desire and concern of the Board and its Chairman should not only be limited to the revenue to obtain from the manufacturers and entrepreneurs but on how to assist them to ensure that the made in Nigeria products floods the international markets.
“This could in turn leads to more world products mandates, more exports and more research and development here in Nigeria. Such tax breaks would increase the depth of our already deficit ridden government and they would be a bold industrial strategy that could contribute to the nation’s wealth. In addition, it will add impetus to our active participation in the ongoing AfCFTA implementation regime. We say this in the context of the competitive edge of the manufacturers, exporters and freight forwarders in Nigeria.”
He, however, emphasized that though taxation policies may not be able to discourage the paper entrepreneurs, they may be used to encourage the type of entrepreneurs who build projects, create and exports new goods or services.
“It is quiet understandable to admit that the past and present government had instituted one tax policy grants or rebates regime and in other forms, but the freight forwarders are mostly concerned with a structured and repackaged tax breaks that will encourage exploration or research and development.
“In all honesty, it is well known to all that presently, some manufacturers and fewer exporters get some tax breaks in the form of fast write offs, slightly lower corporate taxes, even at that, one cannot handily state of any known ‘no sales taxes on exports’ of which the freight forwarders will appreciate that more be done in this regards.
“Here again, may we be quick to posit here, from point of professional experience and stand which is to say that our Free Trade Zones capacity and even its essence has been under utilized and untapped and reasons noted from findings is not too related from a home tailored and real time tax breaks”, he said.
He, therefore, encouraged the Minister to evolve a direct policy that would promote the official establishment of the lobbyists registry and stating clearly the applicable and acceptable guidelines governing lobbying activities in the country even as he posited that the need to curb abuses in the form of lavishing public paid decisions makers with gifts, tips and other benefits (including free flights with all expenses paid) cannot be over emphasized.
“In addition, there is also need to evolve a similar policy for ceiling and disclosure rules to govern the political campaigns contributions. Presently, the applicable rules are spotty and are not effective. As a matter of consideration, the new rules should promote the integrity of our electoral system.
“It is also note worthy to state that there is a common interplay between economic lobbyists and political gladiators in the context of trade investments and rebates and our findings showed that most of the contracts awarded in this neighborhood are prone to this unhealthy interplay which is not too good for a developing economy.
“This has become necessary because findings available showed that concentration activities is on the increase and promotes unhealthy monopoly that deters even economic activities growths. Wherefore, it is pertinent to caution that there is need for more vigilance to ensure that economic power does not buy further political powers.
“Time will not permit to re-echo the negative effects of the banking and foreign exchange policies with regards to international trading activities of the nation. It is important to pin point that the freight forwarders in this instance see this as a most critical concern that requires the attention of the authorities before the AfCTA implementation gathers momentum”, he submitted.
Photo: Dr. Eugene Nweke, former National President, NAGAFF.
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