The NAFDAC Head of Investigation and Enforcement, Federal Taskforce, Embugushiki-Musa Godiya, also said the agency would work to ensure that fake cosmetics and other counterfeit products were completely wiped out of the country.
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CPPE applauds Buhari for withholding assent to 2022 Finance Bill
…Identifies sections for amendment
The Centre for the Promotion of Private Enterprise (CPPE) has applauded President Muhammadu Buhari for withholding assent to the controversial 2022 Finance Bill initially passed by Nigerian lawmakers.
In a press statement, Mr Muda Yusuf, who runs the CPPE, identified five ‘costly’ gaps in the document threatening to further harm the Nigerian economy.
The ‘dangerous’ gaps specifically border on arbitrary imposition of import levies on all imports from outside of Africa; imposition of excise duty on “all services,” as well as shortfall in education tax, and more.
Muda Yusuf, who was former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), made far-reaching recommendations as well:
“We commend the President for withholding assent on the 2023 Finance Bill as this would allow for broader consultation, participation an inclusion in the legislative process. This is also in line with democratic standards of law making,” he said a position paper he made available to PBA correspondent.
Recall that the CPPE condemned the hurried passage of the Finance Bill by the Nigerian National Assembly and urged the President to decline assent.
Its latest position follows the news of President Buhari’s positive response to the CPPE’s call. Yusuf, therefore, urged the lawmakers to explore more options and tweak the 2023 Finance Bill so as to unlock the country’s revenue potentials in 2023.
Meanwhile, the CPPE commented on some aspects of the bill as follows:
IMPOSITION OF EXCISE DUTY ON ALL SERVICES
This provision is too broad, inexact and wide ranging and makes the business community very vulnerable. There is no jurisdiction around the world where all services are liable to excise duty. Excise duties are typically specific and selective, and often imposed to disincentivise consumption or production of particular product groups.
The current open-ended provision is inimical to investment. It makes the imposition of excise duties arbitrary, indiscriminate and unpredictable. The bill should contain specifics of services to be taxed for better stakeholder engagement.
Meanwhile, it is important to take account of the fact that practically all services are currently liable to Value Added Tax.
The service sector is a very strategic sector in the Nigerian economy, contributing 54 per cent to GDP and currently the largest contributor to government tax revenue. It also accounts for an estimated 53 per cent of employment.
We are concerned that companies in the service sector are already paying huge taxes in the form of company tax which is currently at 30 per cent , tertiary education tax at 2.5 per cent, NITDA levy at 1 per cent, NASENI levy at 0.25 per cent, Police Trust Fund Levy at 0.005 per cent and withholding tax on profit distribution at 10 per cent. All the taxes are percentages of company profit. Additionally, there are numerous taxes and levies imposed by state governments.
Investors in the sector pay various sums as fees and levies to regulatory agencies. High tax burden on businesses is detrimental to investment and job creation and could ultimately undermine revenue generation prospects of government.
Revenue drive should rather focus on efficiency, effectiveness and equity as major policy objectives of taxation.
IMPORT LEVY ON IMPORTS FROM OUTSIDE AFRICA
The proposal in the Finance Bill to impose 0.5 per cent levy on all imports coming from outside of Africa will be an additional burden on both businesses and the citizens. It will escalate operating expenses, production costs and fuel inflation in the economy. Most equipment, machineries, ICT equipment, medical equipment are all imported from outside of Africa. Imposing a levy of 0.5 per cent on this group of items will be inimical to investment, economic growth and the welfare of the citizens.
Already, currency depreciation had made imports very expensive with profound inflationary effects. Currently, investors and citizens are paying 0.5 per cent levy on all imports from outside of ECOWAS. This is in addition to import duty and numerous charges and levies paid by importers at the ports.
Many manufacturers import their raw materials from outside of Africa, especially intermediate products not available on the continent. We strongly advise against the imposition of an additional levy on imports.
COMPANY INCOME TAX HIKE ON GAS FLARING COMPANIES
Nigeria has one of the largest gas reserves in the world of more than 190 trillion cubic feet. It is Africa’s largest gas reserves. The prospects for investment in gas have never been this auspicious, driven largely by the Russian-Ukraine conflict. This is a great opportunity for Nigeria to attract investors into its gas sector and take advantage of the current global high demand for gas.
This is not a good time to impose a punitive tax on gas companies. Besides, the 50 per cent tax introduced is not consistent with the essence of the recently enacted Petroleum Industry Act [PIA]. The government should explore other gas flaring mitigation measures, which must be proportional to the volume of gas flared.
Policy consistency is vital to attract and retain investment in the gas sector in line with the aspirations of government as expressed in the PIA. The act was enacted just about a year ago. We should refrain from actions that would signals of policy inconsistency to investors in the sector. This could dampen investors’ confidence.
PROPOSAL TO INCREASE TERTIARY EDUCATION TAX FROM 2.5 PER CENT TO 3 PER CENT
Less than two years ago, the tertiary education tax was increased from 2 per cent to 2.5 per cent. It is too soon to propose another increase. Besides, companies are still contending with several macroeconomic, structural, global and regulatory headwinds. It will be inequitable to increase the tertiary education tax at this time. This would will be putting too much burden on corporate entities on business and investors in the Nigerian economy.
The perception of corporate entities as cash cows for solving all revenue problems is utterly misplaced. We should be a lot more creative in our revenue drive so as not to overburden the current crop of tax payers. The tax base is still extremely narrow and should widened. The economy is about 50 per cent informal, which meant that the incidence of taxation is largely on the formal sector of the econom
The focus of taxation should be on collection efficiency, broadening the tax base and improvement in tax governance. Revenue collection responsibilities should be integrated into a single agency for more efficient administration.
Additionally, there is implicit taxation as companies still have to provide supporting infrastructures and other facilities such as power generation, water supply, and security for their assets. In some instances, companies construct access roads to their premises. Numerous taxes, fees and levies are also paid to sub-national governments and regulatory agencies. All of these should be taken into consideration in the formulation of tax policies.
Excessive taxation on businesses has harmful effects on investment, economic growth, job creation and poverty reduction. As highlighted previously, effective corporate tax is currently about 34 per cent which is one of the highest in the world.
UNLOCKING REVENUES FROM SUBSIDY REGIMES
The Nigerian economy is heavily burdened and encumbered by two major subsidy regimes: the fuel subsidy regime and the foreign exchange subsidy regime. Huge sums of revenue can be unlocked from these subsidy regimes, if appropriate reforms are implemented.
Already, there is a plan to discontinue petroleum subsidy, which is a positive development. This action would unlock a minimum of N6 million revenue into the federation account annually. Additionally, there would be an end to the several years of plundering of the nation’s resources through the subsidy regime. The next administration would need to demonstrate the political will to put an end to this predatory practice. Meanwhile, CPPE strongly appeals to the labour unions and the civil societies to give the oil and gas sector reforms a chance to prevent the Nigerian economy from tumbling into deeper crisis.
The second major subsidy regime from which huge revenues can be unlocked in the short term is the foreign exchange policy regime. Over the years the exchange rate assumptions in the appropriation acts were grossly and deliberately understated, leading to loss of trillions of naira to the federation account.
In 2021, for instance, the Central Bank sold an estimated $18 billion US dollars as interventions in the foreign exchange market at a hugely subsidized average rate of N400 per dollar. Effective exchange rate in the economy at the time was N560/$. This meant an estimated subsidy of N160/$ which translated to a conservative estimated revenue loss of N2.9 trillion.
Similarly in 2022, an estimated $18 billion was sold as intervention in the forex market at an average rate of N447/$. The average effective exchange rate for the period was conservatively about N650. Again, this meant a subsidy of N203/$. This translates to an estimated revenue loss of about N3.64 trillion.
These are huge loses of revenue to foreign exchange subsidy which are as damaging to the economy as the fuel subsidy. But curiously, the National Assembly and the CBN had serially, grossly and inexplicably underestimated the exchange rate benchmark in the appropriation bills of the past few years. For an economy that is burdened by huge fiscal deficit and unsustainable debt obligations, this should not be allowed to continue in 2023. The reality is that forex end users are paying well over N700/$ for their business transactions. Selling government forex at less than N500/$ in inexcusable.
The exchange rate assumption in the budget should be immediately reviewed to reflect exchange rate realities and boost revenue to the federation account. This could be done within the framework of the Finance Act which is fortunately being reviewed. A realistic exchange rate benchmark would boost the federation account revenues by about N4 trillion in 2023.
This will not only benefit the federal government, but the states and local governments as well. A realistic exchange rate would also improve forex inflows into the economy, enhance the country’s foreign reserves, strengthen the naira and elevate investors’ confidence.
Currency brokers, middlemen and some operatives in the financial system are the major beneficiaries of the huge arbitrage opportunities, massive rent economy and the vast round-tripping enterprise that the forex subsidy regime has created.
Unlocking revenues from the forex subsidy would be a significant major step towards realisation of fiscal consolidation objective of government. This would also reduce the current tendencies to impose additional burden of taxation on businesses and moderate macroeconomic headwinds.
It should be stressed that this is not a devaluation proposition. It is a strategy meant to correct distortions in the forex ecosystem, boost government revenues, curb corruption in forex transactions and enhance liquidity in the forex market. It will also improve efficiency in forex allocation, promote transparency in the forex environment and raise investors’ confidence in the Nigerian economy.
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Invoke executive order for state, LG police, Afenifere tells Tinubu
The pan-Yoruba socio-cultural and political organisation, Afenifere, on Saturday, urged President Bola Tinubu to invoke an Executive Order for the establishment of state and local government Police.
Afenifere, in a statement by its National Publicity Secretary, Jare Ajayi,in Ibadan, the Oyo State capital, also called for the erection of close-circuit television sets and deployment of modern technology for security purposes in strategic locations to end insecurity.
Ajayi said, “There are indications that Tinubu is desirous of putting an end to this deleterious menace. Towards the end of January this year, he approved the procurement of digital tracking tools to enhance the apprehension of bandits, terrorists and armed robbers.
“On Monday, April 22, this year, he used the occasion of addressing participants at the African Counter-Terrorism Summit which opened on that day in Abuja to assure everyone of his government’s readiness to ensure greater security. Unfortunately, recent happenings have not shown that the President’s desire in this respect is being worked upon.
“President Tinubu should get state and local government police off the ground immediately through the invocation of an Executive Order while the process of amending the Constitution continues.
“Close circuit television sets, deployment of modern technology for security purposes including drones must be effected immediately.”
He explained that the statement was motivated by the recent reports of banditry and kidnapping in Ogun, Edo, Ekiti, Oyo, Kogi, Zamfara and Niger States, respectively which made a research organization declare Nigeria as one of the top nations where kidnap ranks highest globally.
Ajayi noted that Fulani herders and farmers’ clashes kept occurring in Osun, Ondo and Oyo State; Otu, Igbeti and Alaga in the Oke-Ogun area of Oyo State were the latest victims.
The Afenifere spokesperson also said, “In order to end insecurity, enhance people’s welfare and ensure the sustenance of Nigeria as one of the top investment destinations in Africa as desired by the government, there is the urgent need by the Federal Government and security agencies to be more innovative and decisive.”
He lamented that banditry, including armed robbery, kidnapping was still occurring on South-West roads such as Lagos-Ibadan, Ibadan-Ijebu-Ode; Akure-Ilesa-Ibadan; Ore-Ijebu Ode-Lagos, Ikirun-Osogbo-Ilesa; Lokoja-Abuja, Owo-Benin and Ibadan-Iseyin-Saki.
“Latest reports have it that on Monday, May 13 instant, eight cocoa farmers were kidnapped at Marindoti Cocoa Farmers’ settlement in Ovia South-West Local Government Area of Edo State. Three students of Millicent Secondary School in the same area on their way to write their Senior Secondary School Examination, were also kidnapped at the same time.
“A sum of N31 million was reportedly paid to ransom three people who were kidnapped at Longe village on Ibadan-Ijebu-Ode Road last week Sunday. On Thursday, May 16, one Seliat Adeniji (nee Raji) was kidnapped in her Ebedi home in Iseyin, Oyo State. Her guard was killed in the process.
“Hon Bello Hassan representing Zurmi/Shinkafi Federal Constituency in the House of Representatives last Tuesday claimed that terrorists have sacked about 50 communities and abducted over 500 people in his area of Zamfara State as bandits overran Zurmi, the second most populous town in the state killing palace officers as well as policemen.”
To put a serious check on all these, the Afenifere spokesman said that there was an urgent need to dig deep into the roots of the menace and to be decisive in applying the necessary measures.
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NAFDAC shuts cosmetic shops in Lagos, seizes counterfeit products
The National Agency for Food and Drug Administration and Control has shut three shops and raided others during a clampdown on the sale of unregistered “Dr. Teal’s” brand of cosmetics in Lagos State.
The agency disclosed this in a post on its X handle on Saturday, stating that the action came after a complaint from the trademark holder.
The statement read, “NAFDAC has shut down three cosmetics shops and raided others, targeting the sale of unregistered ‘Dr. Teal’s’ brand cosmetics. This action follows a complaint from the trademark holder regarding potential counterfeit products.
“Two suspected shops along Excellent Line at the Trade Fair Complex were targeted, resulting in sealed shops and invitation letters issued to attendants.”
It added that another development unfolded at Okas Global Link Limited where NAFDAC confiscated over 200 cartons of various Dr. Teal’s products and other unregistered cosmetics, suspecting them to be the source of distribution.
A shop identified as Cubana Stores at Phil Hallmark Plaza was also reported to have been sealed for stocking and selling the moisturising body and bath products of the alleged unregistered Dr. Teal’s brand.
NAFDAC added that according to its regulations, shop owners found guilty of selling unregistered products face penalties of up to ₦5m fine.
It said shop owners were also being questioned as part of ongoing investigations.
In the statement, the agency emphasised the health risks associated with fake cosmetics, stating the potential dangers of using products containing harmful substances.
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Traders, soldiers clash at Banex Plaza in Abuja
The Federal Capital Territory Police Command has deployed intelligence officers to Banex – an electronics and telecommunications gadgets market, in Abuja following a conflict that ensued between soldiers and some traders on Saturday.
A viral video seen by our correspondent on X on Saturday showed a multitude of civilians overpowering some soldiers during a free-for-all fight at Banex.
The Defence Headquarters, and the spokesperson for the Nigerian Army, Onyema Nwachukwu could not be reached for comments as of press time.
Meanwhile, a trader who simply identified himself as Abdul, told our correspondent on Saturday that the conflict ensued over the sale of a mobile phone.
“There’s a problem at Banex now. Some soldiers came to complain about a phone, and during an argument with the traders, a fight ensued,” Abdul simply revealed.
When contacted over the development, the spokesperson for the FCT Police Command, SP Josephine Adeh said the Commissioner of Police, Benett Igweh has deployed officers of the FCT Intelligence Response Team to the scene of the incident.
“The CP has deployed the Intelligence Response Team to the scene,” Adeh confirmed.
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