The Director/CEO of the Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf says some tax and import duty provisions in the 2023 Fiscal Policy Measures of the Federal Government would significantly hurt the Nigerian and worsen the de-industrialization worries in the Nigerian economy.
In a statement, the economist noted that the construction and transportation sectors are also vulnerable to fiscal policy induced downside risks.
In his words, “Some of the measures could exacerbate inflationary pressures which are detrimental to economic growth and manufacturing, construction and transportation sectors.
” It is double whammy for economic players to contend with a regime of high import duty, prohibitive tax rates amid a depreciating currency.
“Fiscal policy measures must seek to ensure a good balance between objectives of revenue generation, boosting domestic production, enhancing the welfare of citizens, promoting economic growth, deepening economic inclusion, facilitating job creation and recognizing societal ethos, beliefs and values.”
Dr. Yusuf specifically noted that Ad Valorem taxes as high as 30%, on alcoholic and non-alcoholic beverages, make the impact more injurious to the industry as it calculated based on the vale of the products.
He further warned that sustaining current investments in these sectors would be a herculean task adding that the policy measures failed to take into account the multifarious challenges which industry operators are currently grappling with.
Some of challenges, Dr. Yusuf said include: weak and declining consumer purchasing power; Naira exchange rate depreciation which is taking a huge toll on cost of production; high energy cost; multiple taxes and levies already being imposed on the industry players.
Others are: risk to jobs in the sector and its extended value chain including millions of MSMEs in its distribution and marketing chain as well as downside risk to manufacturing sector outlook in the Nigerian economy.
The CPPE boss said It was insensitive of policy makers to impose a whooping 40% import duty on vehicles in an economy where there is no mass transit system and where vehicle ownership has become a necessity, especially for the middle class.
“There is an additional 2% and 4% green tax, depending on the engine capacity of the vehicle. This translates to import duty of 42% or 44% depending on the engine capacity of the vehicle.” He stated.
Dr. Yusuf warned that this would lead to high transportation cost as vehicles costs increases as well as risk of increased vehicle smuggling, especially in the light of porous borders among others.