The Centre For the Promotion of Private Enterprises (CPPE) has sought concessions on agric inputs and machinery, foreign raw materials, and fiscal incentives for food processing companies to reduce the cost of staple foods.
In addition, the centre is seeking a 50 percent cut in the duty on passengers’ buses and cars of 2000cc engine capacity to improve government revenue and discourage smuggling.
Muda Yusuff, CPPE founder sought the above as he also opposed the plan by the Federal Inland Revenue Service (FIRS) to charge VAT on the informal sector.
The CPPE founder who commended President Bola Tinubu’s administration for normalising policy implementation processes consistent with the national tax policy and best practice principles, noted that the executive orders demonstrate the sensitivity of the government to the predicament of the manufacturing sector.
President Tinubu last week signed four executive orders which suspended the excise duty escalation in the 2023 Fiscal Policy measures by the previous administration, suspended the Green Tax on some categories of vehicles, and also the deferment of the effective date of the Finance Act 2023 and some customs tariffs.
Prior to the executive orders, these have impacted the manufacturing sector negatively, leading to the decline in the sector’s growth from 2.8 percent recorded in the fourth quarter of 2022 to 1.6 percent in the first quarter of 2023.
The sector which grapples with myriads of challenges such as depreciation in the exchange rate among others which severely inhibits production barely contributes 10 percent to Gross Domestic Product [GDP] in the first quarter of 2023.
Yusuf, noting that the recent reforms, especially the fuel subsidy removal and the adoption of a market-reflective exchange rate regime, have significant fiscal consolidation outcomes, proposes four-dimensional channels of utilization of these additional revenues.
He asked that the increased revenue be committed to reducing the recurring fiscal deficit, and by extension, the growing burden of debt in addition to increasing the wages of public sector workers across all levels and in all tiers of government to mitigate the current hardship inflicted by fuel subsidy removal.
He also sought generous import duty concessions on agricultural sector inputs and machinery, intermediate products for manufacturers which are not available locally, generous fiscal incentives for food processing companies to reduce the cost of staple foods, and scrapping of import duty on industrial machinery and equipment, and 50 percent cut in the import duty on 15-seater passenger buses and above and also, on cars with 2000cc engine capacity to give relief to the middle class and improve the supply side of public transportation.
Meanwhile, Yusuf opposed the FIRS’ plan to undertake VAT collection in the informal sector, stating that over 98 percent of the informal sector traders are microenterprises that are not liable for VAT payment.
While most operators in the sector have not recovered from the shocks of the fuel subsidy removal and the associated inflationary impacts, they also have no records which could be used for purposes of assessment. There is therefore a high risk of arbitrary assessment.
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