The Centre for the Promotion of Private Enterprises (CPPE), yesterday warned that some tax and import duty provisions in the Federal Government’s 2023 Fiscal Policy Measures may exacerbate inflationary pressures and spike de-industrialisation.
Founder/Chief Executive Officer, CPPE, Dr Muda Yusuf, made the conclusion after his specific reviews of the new fiscal policies including excise duty on beverages and tobacco, ad valorem on alcoholic drinks, import duty on vehicles and a host of others.
Yusuf, in a statement, said: “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 and promoting economic growth, deepening economic inclusion, facilitating job creation and recognizing societal ethos, beliefs and values.”
For instance, the fiscal policy imposed rates on non-alcoholic beverages, fruit juice, and energy drink excise duty of N10 per litre, beer and stout, 20%, and Ad valorem tax N75/litre.
“It should be noted that Ad valorem tax is based on the value of the product, which makes the impact even more injurious to industrialists and sustaining current investments in these sectors would be a herculean task.
“These policy measures failed to reckon with the multifarious challenges which industry operators are currently grappling with, some of which include weak and declining consumer purchasing power,” he said.
“The implications for the sector include drop in sales, loss of direct and indirect jobs, risk of decline in profitability and shareholder value and elevated risk of smuggling products,” he added.
Fiscal policy measures must seek to ensure a good balance between objectives of revenue generation, boosting domestic production, enhancing the welfare of citizens and promoting economic growth, deepening economic inclusion, facilitating job creation and recognizing societal ethos, beliefs and values.
Regarding the 40% import duty on vehicles, Yusuf insisted that such a high import duty on vehicles cannot be justified amid falling disposable income.
“It is therefore insensitive of policy makers to impose a whopping 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,” he said.
He said the implications of the policy on the economy will include high transportation cost, risk of increased smuggling, while the middle class continues to contend with affordability problems.
On the 45% import duty on iron and steel products, he noted that Nigeria currently contends with high cost of construction of both public and private properties, and as such the sector is also vulnerable to fiscal policy induced downside risks.
