TheCable

The Centre for the Promotion of Private Enterprise (CPPE) says certain tax and import duty provisions in the recently approved fiscal policy measures (FPMs) of the federal government, would significantly hurt the economy.

In a statement on Tuesday, Muda Yusuf, CPPE’s chief executive officer (CEO), said the imposition of taxes could “worsen the de-industrialisation worries in the Nigerian economy”.

Yusuf noted that the construction and transportation sectors are also vulnerable to fiscal policy-induced downsides.

“Some of the measures could exacerbate inflationary pressures which are detrimental to economic growth and manufacturing, construction, and transportation sectors,” he said.

“It is double whammy for economic players to contend with a regime of high import duty, and 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.”

Speaking on the excise duty on alcoholic and non-alcoholic beverages, the CEO said sustaining current investments in these sectors would be a difficult task.

He said the policy measures “failed to reckon with the multifarious challenges” that industry operators are currently grappling with.

According to Muda, some of these issues include; declining consumer purchasing power; naira exchange rate depreciation; 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; and downside risk to manufacturing sector outlook in the economy.

He said the implementation of the new excise duty rates would lead to a drop in sales for investors in the sector; negative effect on tax revenue from the sector; loss of direct and indirect jobs; likely loss of livelihood by millions of farmers; decline in profitability and shareholder value; and elevated risk of smuggling of the products.

Last week, Taiwo Oyedele, Africa tax leader at PricewaterhouseCoopers (PWC), suggested that the FPM’s should be suspended and revisited over several loopholes, including policy inconsistency and lack of critical stakeholders engagement.

The Manufacturers Association of Nigeria (MAN) also said the new FPMs would likely cause illicit trade, capacity underutilisation, and layoffs in the industry.

TheCable had highlighted and explained some of the new policy measures here.