Customs duties on ‘personal effects’

A woman, Mrs Udensi Adaeze Nwagboliwe, recently created a scene at the Nnamdi Azikiwe International Airport, Abuja, over the taxing of her handbag, a pair of canvas footwear and other effects by the Nigeria Customs Service (NCS). She was miffed and could not understand why  the NSC seized and demanded that she should pay duties on what she considered her  ‘personal effects’, but the NCS put its foot down. Some Nigerians who heard of the incident were similarly outraged that citizens or visitors could not bring in their personal effects without import tariffs being foisted on them. But the truth is that the NSC was only following the law: it is not wrong to impose tax on luxury items because that is consistent with the extant laws of the land.  And it has socioeconomic implications.

Some affluent Nigerians are known for their ostentatious lifestyle and unbridled appetite for foreign goods but are averse to, and often cleverly avoid, paying tax. When they pay at all, they pay what is not commensurate with their status. It is therefore not out of place to make such people pay tax in the hope that they will be ultimately swayed to channel more of their wealth to the acquisition of productive assets instead of the showy and fleeting ones. Again, government needs money to fund its budget and very much so in a clime where yearly budgets incorporate huge deficits. It conforms to international best practices to make people pay tax on their extravagance and display of opulence; it, in a sense, helps in the onerous but socially imperative task of income redistribution.

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It is logical and apposite that the wealthy who had extracted so much from the society are made to return a little back to it. However, the snag with Nigeria’s case is the official limit set for the value of imported goods to qualify as duty-free ‘personal effects’: the current limit of N50,000 is too small as a threshold. It must be reviewed upwards. The value of this amount may have been substantial when it was fixed, but that is no longer reflective of the reality. Pray, what real luxury items can a sum in excess of N50,000 or even twice that amount buy today? Given the depreciated value of the country’s currency, it is patently unreasonable and draconian to pay import tariffs on personal items just because the value is in excess N50,000.

For instance, how and why should a traveller/person who paid over $2,000 for a ticket pay tax on things over N50,000 or $138.31? That is illogical and outrageous. The threshold must be increased and this should be possible without necessarily going through legislative review. The supervising minister of the NSC in consultation with the leadership of the service should be able to come up with a new threshold that reflects the reality on the ground. And that is a simple exercise because all that is needed is to find out the real value of N50,000 when it was set as the brink of the value of personal effects on which tariff would not be paid.

If, on the other hand, the process of legislative amendment has to be followed in order to alter the law that promises to exacerbate unwarranted harassment and extortion of citizens and visitors to the country on the basis of what constitutes the value of their personal effects, the NSC should liaise with the legislature for a swift amendment of the threshold. In saner climes where legislators are true representatives of the people acting largely in their interest, a private member’s bill would have long been initiated to address any outdated or obnoxious legislations without waiting for the prompting by the executive arm which may never happen. And on this score, it has now become more imperative than ever for the draftsmen/legislators to begin to write or propose bills in such a manner that they culminate in forward-looking, all-season and dynamic laws with the insertion of clauses that give implementers the latitude to adequately reflect new realities while at the same time preventing them from engaging in arbitrariness. That way, a piece of outmoded legislation will continue to be relevant without having to go through the whole gamut of rigorous and uncertain legislative review.

It is rather curious that until recently, there had not been much uproar around the implementation of the extant law on the doorsill of the value of personal effects on which import tariffs need not be imposed. Could it be that the law was not being enforced all the while or that the law enforcers were simply using their discretion for personal gains? Whatever the case is, it is imperative that the relevant officials are cautioned and monitored to ensure that they do not allow the implementation of this archaic law to result in further arbitrariness and corruption pending the alteration of the patently insufferable legislation by executive fiat or legislative review. The goal of government revenue drive and the socioeconomic objectives in taxing luxury items can still be achieved without the ludicrous imposition of tariffs on imported personal effects whose value is in excess of $138.31.

Nigerian Tribune