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CPPE applauds Buhari for withholding assent to 2022 Finance Bill

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…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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Ogun Govt sympathises with victims of Ado Odo/Ota over rainstorm destruction

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…’We’re in touch with IBEDC for prompt action’

Ogun State  Government said it  is in touch with the Ibadan Electricity Distribution Company (IBEDC) to ensure the immediate fixing of poles damaged as a result of rainstorm occasioned by Sunday’s downpour in some parts of Sango in Ado Odo/Ota Local Government Area of the state.

The government, in a statement signed by the Special Adviser on Media, Hon. Kayode Akinmade said a team from the state government was in the area on Monday to physically ascertain the extent of damage and to know how to engage with IBEDC, as well as sympathising with victims.

Akinmade noted the cables had not been energised before the destruction, which saved lots of lives.

“Our team went on physical site inspection of the affected area on Monday to ascertain the extent of the damage and to know how to engage with the IBEDC team.

“We are currently working with the IBEDC team led by the Regional Manager and the Technical Head for the Ogun Region. Some of the less affected feeders have been restored and energised while the clean-up of the most affected areas has already started.

“Most of the poles on the roads have been removed while the remaining will be taken out today (Wednesday). We are working with IBEDC to ensure there will be full restoration of power in Sango Ota before the week runs out.

“The government is not relenting in its effort to make sure that we restore power to Sango Ota and its environs and we can assure the citizens that we are on top on the matter.

“We, therefore, commiserate with those whose properties were destroyed by the fallen poles, as the government urged those living in the area to remain calm.”

Residents of lyana lyesi, Osuke Town, Egan Road, lyana Ilogbo, Ijaba, Ijagba, Itele, Lafenwa, Singer, Joju, Alishiba, Oju Ore, Tollgate, Eledi, Akeja, Abebi, Osi Roundabout, Ota Town, Ota Industrial Estate, Igberen, lju, Atan, Onipanu, Obasanjo, Lusada, Arigba, Odugbe, Ado-Odo, Igbesa, Owode. Olokuta, Hanushi, Bamtish Camp Lufiwape, Eltees Farm, August Engineering, Spark Cear Soap Ayetoro, Amazing Grace Oil, Christopher University, Royal Garden Estate were affected by the disaster.

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Ortom urges Alia to work with SGF for more democracy dividends in Benue

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By Titus Atondu, Makurdi

The former Governor of Benue State, Chief Samuel Ortom, has called on his successor, Governor Hyacinth Alia to work in synergy  with the Secretary to the Government of the Federation, (SGF), Sen George Akume for sustainable democracy dividends to the state.

 Ortom made the call in Makurdi  while speaking at the public lecture organised by his former aides on the occasion of his 63rd birthday.

Ortom described Sen George Akume as a true father, his leader and mentor and attributed all his achievements in life to the SGF.

He  also thanked Governor Hyacinth Alia for his good will message on his birthday and warned that Benue state has not had the position of SGF in the past and called on Governor Alia to embrace and work with him to enable the state to benefit from the position.

“Benue is our state, we have no other state and no one will come from anywhere to bring peace to Benue.

“Alia must sheathe his sword and find ways to work with the SGF so that all of us can enjoy the dividends of that position,” Ortom maintained.

He noted that elections were conducted and won, litigation were entered and God gave him victory saying, “It is his responsibility to do the needful so that Benue state will be at peace.”

Ortom expressed worry  that Benue is under siege and the governor alone or the SGF and himself cannot fight it alone without working collectively. He therefore noted that, “We are available if we are called upon to support or add value to the peace efforts of the government so that our people can live and enjoy the dividends of democracy.”

He  enjoined Benue people to pray for their leaders, Ortom said, “If I had my way, I would have given everyone the opportunity to be the Governor even in a few days.

“The challenges are enormous. You would not understand the challenges we go through but when you are there, you will understand the issues better.

“Nigeria is passing through very difficult times and that was what I was fighting against and I’m happy that people appreciated what we were doing,” he explained.

He appreciated his former appointees for organising the celebration of his 63 birthday anniversary in his honour.

“I’m very humbled by this special lecture on my 63 birthday celebration. This is not my first but this is the first time I’m witnessing a lecture and I must say that I’m pleased and enriched with all that was said here.

“I was taken unawares. You have made me know that I am appreciated. I thought I was used and dumped. I’m grateful to God for the eight years in office. I did everything with the fear of God, with equity, justice and fairness.

“I must have stepped on toes and those I know and those I didn’t know, I ask for forgiveness. I am humbled by this programme and further encouraged by your presence, kind words and prayers,” Ortom testified.

Guest Lecturer, Prof Samuel Aghalino, in the department of History and International Studies, University of Ilorin who is also the President Historical Society of Nigeria said, “Ortom was that Governor with a face cap. Anyone with a face cap is a revolutionary.

“Ortom played a significant role in extending politics beyond the borders of the state.

“He is one of the few politicians that stood in defense of his people, and was passionate in standing for human value while also demonstrating uncommon leadership.

“He was committed to the wellbeing of his people and stood vehemently, against the then government for murdering justice, fairness, equity and accountability, adding that Ortom expressed a rare readiness to cooperate with the investigations.

“He was a servant leader at a great cost to himself. At a time, during the Buhari administration, the doors of Aso Rock, the seat of power was shut against him for speaking the truth to power and holding the powerful accountable. I wonder how he survived.

“Ortom believes that politicians do not have to strive to be perfect to provide good governance to the people because only God is perfect. In his mind, you only have to love the people, therefore when it comes to democratic considerations, Ortom represents the school of thought that existence must take precedence over essence in governance.”

He said Ortom will be remembered by his people for the numerous things he has done and still doing.

Nigerian NewsDirect reports that the lecture was graced by prominent personalities like the former Attorney General of the federation and minister of Justice, Mike Aondakaa, Speaker, Plateau State House of Assembly, Gabriel Dewan, Member representing Apa-Agatu Federal Constituency, Pastor, Ojotu Ojema, Former Deputy Governor, Engr Benson Abounu, representatives of the Tor Tiv, Professor James Ayatse, Ter Gwer Dominic Akpete, the Ochidoma, Ogabaidu John Elaigwu represented by Dr Chris Ijale among others

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Katsina Gov. tasks corps members on nation building, cultism

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By Matthew Denis

The Governor of Katsina State, Mallam Dikko Umaru Radda has tasked National Youth Service Corps members deployed to the State for the one year national service to strive towards nation building.

This is contained in a statement signed by Director, Press and Public Relations, Eddy Megwa, to the governor and made available to journalists on Wednesday.

He also lauded the immense contributions of successive batches of corps members to the socio-economic development of Katsina State over the years, especially through corps members community development service projects and also increasing the manpower needs in schools and in the industrial sector across the State.

Governor Raddah disclosed this at the NYSC Katsina State Orientation Camp, while speaking through his Deputy, Alhaji Farouk Lawal Jobe during the swearing-in ceremony of the prospective corps members deployed to the State.

The Governor urged the corps members to embrace the opportunities of the orientation course to prepare themselves for leadership responsibilities.

“I challenge you to live up to the standard already set by your predecessors. It is my belief that the orientation lectures will stimulate you to strive for the socio-economic development of our country.

“I urge you to see the opportunity of your call to service as a rare opportunity and your commitment to the Oath of Allegiance to your fatherland”, he said.

He also advised the corps members to shun cultism, political and religious intolerance with other forms of anti-social behaviour.

The NYSC Katsina State Coordinator, Hajiya Aisha Muhammad in her address stated that the orientation course is the first among the cardinal programmes of the NYSC, which was designed to prepare corps members for the challenges of the service year and beyond.

She added that the orientation course, which is a regimented environment has over the years been able to inculcate in the youth, the spirit of positive citizenship, leadership values including the ideals of commitment to national assignment, patriotism, integrity, diligence and loyalty to the fatherland.

“I enjoin you to obey all camp rules and regulations as any erring corps member will be referred to the Camp court for appropriate sanctions in line with the provision of the NYSC by-laws,” She added.

The Coordinator also said a total of 1,410 prospective corps members comprising 715 males and 695 females were deployed to the State.

The Director General of National Youth Service Corps, Brigadier General YD Ahmed who was among the dignitaries that witnessed the swearing-in ceremony earlier in the day implored the corps members to take full advantage of the NYSC Skills Acquisition and Entrepreneurship Development (SAED) programme and acquire at least a skill while in camp.

The DG added that skills acquisition is the remedy to the increasing youth unemployment in the country.

General Ahmed who urged the corps members to be security conscious at all times also advised them to obey the cultural beliefs of their host communities.

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