The Centre for the Promotion of Private Enterprises (CPPE) has said that some tax and import duty provisions in the 2023 Fiscal Policy Measures of the Federal Government may adversely affect the economy.
Specifically, Dr Muda Yusuf, Founder, CPPE, in a statement of Tuesday, said those provisions could worsen the de-industrialisation worries in the Nigerian economy and exacerbate inflationary pressures.
The specific reviews of the new fiscal policies include excise duty on beverages and tobacco, ad valorem on alcoholic drinks, import duty on vehicles and others.
Yusuf stressed that the construction and transportation sectors were also vulnerable to fiscal policy induced downside risks.
He stated that 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 amongst others.
“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.
“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 said.
Addressing the 40 per cent import duty on vehicles, Yusuf said it was difficult to justify the high import duty on vehicles, noting that there was already an increasing affordability problem, especially by the middle class.
He said the implications of the policy on the economy included high transportation cost, risk of increased smuggling, while the middle class continued to contend with affordability problems.
“It is therefore insensitive of policy makers to impose a whopping 40 per cent 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.
The CPPE boss also expressed concerns over the import duty of 45 per cent on iron and steel products, saying, “the country currently contends with high cost of construction of both public and private properties”.
