Manufacturers under the Manufacturers Association of Nigeria (MAN) have applauded the Federal Government for waiving temporarily Value Added Tax (VAT) on Automotive Gas Oil (AGO), commonly called diesel.
The federal government had earlier waived the value-added tax (VAT) on diesel for the next six months as part of measures to cushion the impacts of the removal of the petrol subsidy.
The waiver is part of the resolution reached by the federal government and leadership of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) at the end of a four-hour meeting held at the State House on Sunday.
The President also promised the deployment of Compressed Natural Gas (CNG) buses and increased investments in Micro, Small and Medium Enterprises (MSME).
The Director-General of the MAN, Mr Segun Ajayi-Kadir, in a statement on Monday said the development was a positive outcome for the real sector.
The MAN DG noted that the tax waiver had formed part of the reconciliation that the association and other members of the Organised Private Sector of Nigeria had sought.
According to him, they had earlier called on government and the Labour unions to use their best endeavours to find common grounds to avoid plunging the economy into crisis.
“We already have enough challenges and the manufacturing sector in particular, is operating on the brink of a recession.
“You would also recall that MAN had stridently advocated for the removal of the VAT on diesel, especially because it has actually become a major ‘input’ into our production process.
“We rely on diesel to power our machines and meet our energy needs in the face of abysmal power supply from the national grid.
“You are also aware that the price has gone above N1,000 per liter. Meanwhile, it is said that diesel is used to fuel about 90 per cent of the haulage trucks that transports petrol from the depots to retail outlets nationwide.
“So, removing the VAT will help reduce the cost as a production input and cost of transportation for logistics and movement of people generally. It should bring relief to workers and the economy,” he said.
Ajayi-Kadir, however, expressed concerns over the six months time frame scheduled for the tax waiver, querying if there would likely be a more permanent and impactful remedy to the problem.
He also emphasised the need to have an expansion of the joint committee to be set up to include stakeholders in the economic landscape.
“We also hope that government and labour will, this time, adhere to the terms of the agreement, so that we do not have to come close to the edge, before we find solutions.
“The anxieties and apprehensions are inimical to business and disrupts production plans.
“We look forward to a success deliberation of the labour unions today and a definite call-off of the planned nationwide strike,” he said.