The action was taken in response to recent criticism of how some of the administration’s economic policies were affecting the public and initiative is intended to place Nigerians at the center of governmental policy and was introduced by Dele Alake, Special Adviser on Special Duties, Communications, and Strategy to the President.
He claimed that various tax regulations were being applied retrospectively, with some of their start dates coming before the formal release of the supporting legal documents.
He continued by saying that the choice was made in order to meet President Tinubu’s pledge to reduce tax complexity and fiscal policy measures that were unfavorable to business.
He said that President Tinubu has signed four executive orders to that effect. The Finance Act (Effective Date Variation) Order, 2023 is one of them. It has moved the start date of the amendments made by the Act from May 23, 2023 to September 1, 2023.
As stated in the 2017 National Tax Policy, this is done to guarantee compliance with the 90-day minimum advance notification requirement for tax changes.
The second is the Customs, Excise Tariff (Variation) Amendment Order, 2023, which similarly complies with the National Tax Policy but moves the start date of the tax modifications from March 27, 2023 to August 1, 2023.
The third executive order, which the president signed, halted the rise of excise duties on domestically produced goods and the 5% excise tax on communications services.
In addition, the previous Executive Order halted the recently enacted Green Tax through the excise tax on single-use plastics, such as plastic bottles and containers. Additionally, Tinubu ruled that the Import Tax Adjustment Levy on specific automobiles would be suspended.
The President gave these directives, according to Alake, “as a listening leader, to lessen the adverse effects of the tax changes on companies and chokehold on households throughout affected sectors.
“The President wants to reaffirm his commitment to looking into complaints about excessive municipal, state, and federal taxes. In its focus on attaining stronger GDP growth and a noticeable decrease in the unemployment rate through job creation, the Federal Government regards company owners, local investors, and international investors as essential engines.
Therefore, the government will continue to provide the necessary impetus through benevolent policies to enable enterprises to thrive in the nation.
President Tinubu wants to reassure Nigerians, whose mandate put him in office, that no new tax increases would be made without extensive and thorough consultations conducted within the framework of a cogent fiscal policy framework.
He claims that the 2017 National Tax Policy, which was passed by the administration of President Buhari and mandates a minimum of 90 days’ notice from the government to tax-payers before any tax adjustments may take effect, is one of the issues with the tax modifications.
The goal of this widespread practice is to give businesses and individuals enough time to adapt to the new tax system. Nevertheless, because the Finance Act 2023 and the Customs, Excise Tariff Order 2023 failed to provide the necessary amount of notice, firms were in breach of the new tax system even before the modifications were gazetted.
This has led to many of the impacted firms already having to deal with growing prices, declining margins, and underutilization of capacity as a result of multiple macroeconomic headwinds and the effect of the Naira restructuring policy, he added.
He said that the previously agreed Excise Tax hikes on alcoholic drinks and tobacco items from 2022 to 2024 are also being put into effect.
In response to a query about how the President’s action would affect the Petroleum Tax and whether new taxes would be introduced, Mr. Zach Adedeji, Special Adviser on Revenue, said the President’s goal was to reduce tax burdens, synchronize, and manage existing taxes in the Nigerian people’s best interests.
“As you correctly stated, there is a plan—possibly a proposal—for a petroleum tax; if you look at the existing pricing templates, that information is already included. Therefore, this suspension is unrelated to it. We are not introducing any additional taxes; the PMS price structure as it stands today has been taken into consideration.
“Like my colleague has mentioned, one of this administration’s main goals is to harmonize our taxes and the manner they are collected. Actually, Mr. President wants to make it simpler and more business-friendly. Since our goal is not to tax poverty, our economic strategy serves as the beginning point for discussing revenue management, which goes beyond tax collection.
“Taxing output is not our intention. Our goal is to enhance our productive activities and production capacity since it will enable us to tax consumption, which is the direction of our economic planning. After that, we want to improve public trust in government.
You can see that we have kept our word by looking at what has transpired over the past few months since we arrived.
In response, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) stated that while the suspension of the 5% excise duty on telecom services has eased the financial burden on telecom operators and subscribers, there are still additional tax issues that the government needs to address.
Multiple taxes in the telecom sector has been a significant concern, according to the association’s chairman, Gbenga Adebayo. He claims that the Tinubu administration needs to address the 39 taxes and levies that telecom providers now pay in total.
Adebayo noted that while the government has behaved appropriately by delaying the excise duty, the tax would have added to the existing problems of many Nigerians who are already struggling to cope with the rise in the cost of many other goods and services.
Adebayo continued by saying that the telecom sector shouldn’t be considered an extractive one since it doesn’t operate in the oil and gas or mineral exploration sectors but rather is a sector that offers social services that have an influence on the local community’s economy and quality of life.
Similar to this, Dele Oye, president of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), praised the government’s actions in delaying the implementation of various tax increases. Oye said in a statement that she welcomes and appreciates the administration’s dedication to making sure that Nigerian firms are not overly burdened by unfavorable rules.
Despite the fact that the tax changes were meant to increase revenue while addressing significant public health and environmental concerns, he pointed out that the lack of adequate notice and clarity regarding implementation of the changes resulted in significant challenges for affected businesses, including rising costs, declining margins, and underutilizing capacity amid rapidly declining spending power.
Oye also asked the Federal Government to keep in touch with stakeholders, develop business-friendly policies, and support long-term economic growth.
“We think that in order for the government to achieve its objectives of greater GDP development and lower unemployment rates through job creation, the private sector is crucial. We look forward to working with the government to provide a supportive business climate that will increase foreign investment in Nigeria and make Nigerian companies more competitive, he added.
The President has also been urged to prioritize combining the revenue collection efforts of the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA), and Nigeria Customs Service (NCS), as well as harmonizing taxes and levies of these agencies, in addition to suspending excise duties, in order to streamline the procedure and lessen the burden on businesses, which is invariably passed on to consumers.
Kelvin Emmanuel, the chief executive officer of Dairy Hills Limited, welcomed the measures and hailed the delay of the introduction of telecom excise charges as a breath of fresh economic air.
According to the International Telecom Union, the levies and taxes imposed on telcos are among the highest in the world. There are 41 separate taxes and levies for telecoms across the federating units of Nigeria, which has one of the highest corporate income tax rates for telcos.
Given the higher cost of conducting business caused by the 300 percent increase in fuel and the 288% increase in Premium Motor Spirit (PMS) due to deregulation, this is a sign that the President is well on his way to tax harmonization.
He also pointed out that the President’s decision to halt the increase in levies on imported vehicles shows that he is aware of how the deregulation of the PMS and the unification of the Naira have affected the cost of duties for car imports as well as the inflation in prices that consumers must put up with when buying imported cars.
Joshua Eze, an investment banker, stated: “The suspension of taxes on communications services, locally-produced cars, and some automobiles might indirectly benefit the poor by making these products more accessible.
The executive orders issued by President Tinubu sought to strike a balance between tax changes and the issues expressed by companies and stakeholders. These actions might help the economy and provide some assistance to the underprivileged population.
Abisodun Ogunfunminire, a social commentator, predicts that prices will begin to decline shortly because he thinks the Executive Orders would remove the obstacles to investment entering the market.
