Stakeholders Expresses Fear, Says Tax Bill, Excise Duty on Foreign Transaction To Worsen FDIs

Stakeholders have continued to express fear over the proposed tax bills submitted to the National Assembly(NASS) by President Bola Tinubu will undermine principle of equitable distribution and the collaborative spirit of federalism.

According to them, they also noted that the various excise duty on forex transactions and others, above official Central Bank of Nigeria(CBN) rates will discourage foreign investments and that will worsen the economic climate which we already have.

The Triple News understand, In October, Tinubu had asked the National Assembly to consider and pass four tax reform bills. The bills include, the Nigeria tax bill, the tax administration bill and the joint revenue board establishment bill.

Speaking on the development, president of the Calabar Chamber of Commerce and Industry (CALCCIMA), David Etim noted that, the essence of the tax reforms is to simplify taxes, while buttressing that One of the biggest problems of businesses in Nigeria today is multiple taxation.

He said, the bills aim to disaggregate tax revenues.So the place where alcohol is sold heavy and VAT from alcohol is heavy gets a greater proportion of tax from alcohol, Those that don’t have it get less. So, everything gets disaggregated and you begin to see, ‘equal work for equal pay.’

“So, I think from what I understand of this and I’ve been discussing with the tax people in Cross River State extensively; the simplification, is a very good thing. It will harmonize and simplify taxes. The issue of multiple taxation will be killed,” he said.

On why the North is opposed to it, he explained that, a lot of the taxes in Nigeria are mostly generated in the southern part of the country. “VAT, especially VAT from alcohol. Now, once the VAT from alcohol goes to the center, it co-mingles with other VAT monies, and it’s now shared on the proportion basis with everybody.

“So, basically, while northern states say they don’t want breweries, they don’t want alcohol business in their state and all of that and they benefit from the taxes that come from that business. And that’s just an example of the disproportionate benefits for tax revenues in this country. This will come to an end with the new bill,” he noted.

In his view, Etim believes that, it is the beginning of the reforms, both in the business sector and in all reforms for the country, whereby, ‘you work hard, you earn hard and you sleep, you snooze, you lose. You know, I think that’s really where we are going.’

For an SMEs expert and member of the Lagos Chamber of Commerce and Industry (LCCI), Daniel Dickson-Okezie, the new tax bills presented to the National Assembly has a lot of challenges, which makes it a major problem. He noted that, the portion that the portion of the bill which says that each state is to retain 100% of its VAT will bring economic disparities among states.

There will be economic imbalance wealthier states that have industries in will have more increased revenue and those who don’t have will become virtually not viable, he said.  He lamented that the tax bill will undermine the principle of equitable distribution and collaborative spirit of federalism.

“The portion that says that 5% excise will be placed on telecoms, gaming and gambling, will put more burden on consumers as well as businesses and firms who are presently struggling heavily to survive due to economic costs and all that. It will threaten Nigeria’s rising digital economy because when 5% excise is paid on telecoms the rising profile as far as digital economy is concerned would eventually disappear. The excise duty on forex transactions above official CBN rates will discourage foreign investments and that will worsen the economic climate which we already have,” he pointed out.

The chairman, Federal Inland Revenue Service (FIRS), Zacch Adedeji, also said, the four tax bills would only enhance the efficiency of the agencies and make their operations more seamless.

He further said, “the main objective is to enhance tax efficiency, ease compliance levels. There is a consensus that multiplicity of taxes is one of our problems. But what are the foundations of this multiplicity. So, in the wisdom of President Bola Tinubu, for us to overcome these problems, we should harmonise these laws scattered in different books.”