2023 fiscal policy measures will hurt Nigeria’s economy, says CPPE

THE Centre for the Promotion of Private Enterprise (CPPE) has said that the additional excise duty the Federal government introduced into the 2023 Fiscal Policy Measures (FPM) would “significantly hurt Nigeria’s economy.”

The CPPE chairman/chief executive, Muda Yusuf, said in a statement he issued on Tuesday, May 2 that the construction and transportation sectors, for instance, would be vulnerable to fiscal policy induced downside risks.

“Some of the measures could exacerbate inflationary pressures which are detrimental to economic growth and manufacturing, construction and transportation sectors. It is double whammy for economic players to contend with a regime of high import duty and prohibitive tax rates amid a depreciating currency,” Yusuf said.

The ICIR had reported that the Federal government introduced a new FPM for 2023 in a circular dated April 20, 2023 and titled ‘Approval for the Implementation of the 2023 Fiscal Policy Measures and Tariff Amendments.’

The policy, which introduced additional excise duty ranging from 20 per cent to 100 per cent on alcoholic beverages, tobacco, wines and spirits, became effective from May 1, subject to a 90-day grace period for importers who had opened Form M before the commencement day.

“Fiscal policy measures must seek to ensure a good balance between objectives of revenue generation, boosting domestic production, enhancing the welfare of citizens, promoting economic growth, deepening economic inclusion, facilitating job creation and recognising societal ethos, beliefs and values,” he said.

He noted some of the specific reviews of the new fiscal policies to include excise duty on beverages, drinks and wines.

A duty of N10 per litre was placed on non-alcoholic beverages, fruit juice, and energy drink; 20 per cent ad valorem on beer and stout (N75/litre); 30 per cent on wine production (N75/litre); and 30 per cent on spirit and other alcoholic beverages (N150/litre).

Ad valorem tax is based on the value of the product, which makes the impact even more injurious to industrialists.

To sustain the current investments in the sectors highlighted will be a herculean task, Yusuf, a former director-general of Lagos Chamber of Commerce and Industry (LCCI), maintained.

He said, “These policy measures failed to reckon with the multifarious challenges which industry operators are currently grappling with.






     

     

    “These include weak and declining consumer purchasing power; naira exchange rate depreciation; high energy cost; multiple taxes and levies.”

    Some implications on the sector as well as the economy will be drop in sales, negative effects on tax revenue; and loss of direct and indirect jobs, Yusuf highlighted.

    He also expressed worries over the 40 per cent rise placed on import duty on vehicles.

    “It is, therefore, insensitive of policy makers to impose a whopping 40 per cent import duty on vehicles in an economy where there is no mass transit system and where vehicle ownership has become a necessity, especially for the middle class,” he said.

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