LEON USIGBE reviews some policies recently put in place by the Bola Tinubu administration, in its attempt to reset the economy.
“We are here to further mend and heal this nation, not tear and injure it,” President Bola Tinubu said, while laying the hue of his administration in his inaugural address. Starting with his removal of the controversial fuel subsidy from that first day in office, some say that he appeared to have gone beyond the usual political rhetoric to match his words with action at a pace that they now wonder whether is sustainable.
After the eight years of President Muhammadu Buhari that some critics maligned as highly nepotistic in appointments especially into the top hierarchy of the security services, the incumbent signalled that he may be toeing a different path by spreading the most important posts in that sector across all geo-political zones.
His short days in office have also seen him hobnobbing with Nigerians from all walks of life including his political opponents pursuant to his declaration that “We shall consult and dialogue but never dictate. We shall reach out to all but never put down a single person for holding views contrary to our own.”
The president has also quickly moved to unify the official and parallel foreign exchange rates, which had been seen as a huge obstacle to the effort to attract foreign investments to the country.
The latest in his effort to execute his mandate to re-engineer the economy came by way of four Executive Orders last Thursday. This act, officials say, is in fulfilment of his promise to address business-unfriendly fiscal policy measures, multiplicity of taxes and put Nigerians at the centre of government policies.
The Orders include the Finance Act (Effective Date Variation) Order, 2023, which has now deferred the commencement date of the changes contained in the Act from May 23, 2023, to September 1, 2023. The aim of this is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
The second one is the Customs, Excise Tariff (Variation) Amendment Order, 2023, which shifts the commencement date of the tax changes from March 27, 2023, to August 1, 2023.
One other Order suspends the 5 per cent Excise Tax on telecommunication services, as well as the Excise Duties escalation on locally manufactured products, while the last Order suspends the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles.
Tinubu also directed the suspension of Import Tax Adjustment levy on certain vehicles, all according to Dele Alake, his Adviser on Special Duties, Communications and Strategy, in the president’s commitment to creating a business-friendly environment.
Alake was of the view that “as a listening leader,” President Tinubu issued the orders to ameliorate the negative impacts of the tax adjustments on businesses and on households across affected sectors as he “will not exacerbate the plight of Nigerians.”
The presidential spokesman further rationalised the enactment of the new Executive Orders by saying that following certain tax changes introduced via the Customs, Excise Tariff (Variation) Amendment Order, 2023 published on the 8th of May 2023 and the Finance Act, 2023, which was signed into law on the 28th of May 2023, “the Tinubu administration has since noticed that some of the tax policies are being implemented retroactively with their commencement dates, in some instances, pre-dating the official publication of the relevant legal instruments backing the policies. This lacuna has created some challenges of implementation.
“Indeed, the intentions behind upward adjustments of some of these taxes are quite noble. They were designed to raise revenue as well as address environmental and health issues of concern. However, they have generated some significant challenges for, and elicited serious complaints amongst key stakeholders as well as in the business community.”
According to him, some of the problems identified with the tax changes include the 2017 National Tax Policy approved by the Buhari administration prescribing a minimum of 90 days’ notice from government to taxpayers before any tax changes can take effect.
“This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime. However, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted. As a result of this, many of the affected businesses are already contending with the rising costs, falling margins and capacity underutilization due to the various macroeconomic headwinds as well as the impact of the Naira redesign policy,” Alake argued.
He also noted that the Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024, which had already been approved, are also being implemented.
Alake maintained that a further escalation of the approved rates by the current administration would present an image of policy inconsistency and create an atmosphere of uncertainty for businesses operating in Nigeria. Similarly, he observed that the Excise Tax of 5 per cent on telecommunication services had generated heated controversy as there is also a lack of clarity regarding its status, just as players in the sector also complain about the imposition of multiple taxes on their operations.
In stressing Tinubu’s commitment to reviewing multiple taxation and other business inhibitions, the special adviser assured that the president “sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation. The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.”
With such policies in just a few weeks in office, some observers believe that the Tinubu administration may indeed be pressing ahead with its declared intention to mend and heal the country, not tear and injure it.
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