The Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has said that some tax and import duty provisions in the 2023 Fiscal Policy Measures of the Federal Government will hurt the economy.
In a statement released on Tuesday, Dr Yusuf noted that the fiscal policy of the government could worsen inflationary pressures, while noting that the policy ought to seek a balance between revenue generation, enhancing welfare of citizens and other indices of economic growth.
He said, “Some tax and import duty provisions in the 2023 Fiscal Policy Measures of the Federal Government would significantly hurt the economy and worsen the de-industrialisation worries in the Nigerian economy. The construction and transportation sectors are also vulnerable to fiscal policy induced downside risks.
“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 recognising societal ethos, beliefs and values.”
The CPPE boss further noted that the excise duty on beverage, drinks, wines, 40 percent import duty on vehicles and 45 percent import duty on iron and steel products will have multifaceted effects on the sectors.
“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 the following: 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; risk to jobs in the sector and its extended value chain including millions of MSMEs in its distribution and marketing chain and downside risk to manufacturing sector outlook in the Nigerian economy.”
On the impact of the policy on domestic manufacturing, Dr Yusuf said, “The local wine industry is already under tremendous pressure from imported wines, which are largely smuggled. With a 30 percent Ad Valorem tax and a specific tax of N75/litre, most wine industries operating in the country may have to shut down.
“It is ironic that rather than support local wine producers to be more competitive and create more jobs, the government has opted to impose even higher taxes on them.
“The immediate risk is that the domestic wine market would be taken over by imported and mostly smuggled wine. Ultimately, the Nigerian economy, domestic investors in the sector and the employees of these firms would be the victims of this policy. The government would also suffer revenue losses because smugglers do not pay tax as they operate in the underground economy.”
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