Taiwo Hassan The Nigeria Employers’ Consultative Association (NECA) has requested the Federal Government to reverse the current Value Added Tax (VAT) from 7.5 per cent to the former five per cent in order to boost businesses post-COVID-19. Taiwo Hassan reports
Indeed, the tension created by the deadly COVID-19 in the economy is yet to douse as businesses are still facing hardship in the land.
Although, the government is not folding its hands either in ensuring that the country’s economy gets started following a N2.3 trillion stimulus package for businesses in order to retool the fragile.
Notwithstanding all the moves in terms of palliative, stimulus package and incentives to kick start trade and businesses in the country’s economy, anxiety is still trailing the 7.5 per cent value added tax imposed by government at the beginning of this year.
Members of the organised private sector (OPS), the umbrella body of the private sector, are still insisting that government returns to five per cent as it will spur businesses and improve the country’s economy post-COVID-19.
NECA’s stance
Speaking during the association’s Quarterly Economic Review in Lagos recently, the President of NECA, Taiwo Adeniyi, said that NECA had requested the Federal Government to reverse the current VAT from 7.5 per cent to the former five per cent.
NECA said this should be part of government’s incentives to businesses, which have been adversely impacted by the COVID-19.
The measure, according to NECA, will also curtail imminent job loss after COVID-19.
Adeniyi said: “We wish to state with concern that organised businesses were basically left in the lurch to weather the challenges alone.
“With many businesses closed down and many others on the verge of bankruptcy, we had urged government to give attention and support to businesses to ensure their survival and competitiveness.
“With unemployment rate soaring high pre-Covid-19 and reaching an alarming rate during the pandemic period, it was expected that necessary Job Retention Scheme as proposed by our Association would be given adequate consideration; this was never the case. As full economic activities are on the brink, we, once again, urge government to take a second look at long term strategic support for organized businesses to enable an accelerated and sustained economic recovery.”
Stimulus packages
Adeniyi said the effects of the various restrictions on businesses prompted the Federal Government to introduce fiscal and monetary measures to cushion the impact on businesses and save the economy from further collapse.
He, however, commended the government for the N50 billion credit to households and Small and Medium Enterprises (SMEs).
“Worthy of commendation is the Central Bank of Nigeria (CBN)’s N50 billion credit facility to households, and Small and Medium Enterprises most affected by the pandemic, as well as N100 billion loan to the health sector, and N1 trillion to the manufacturing sector. In addition, the interest rates on all CBN interventions programmes were revised downwards from nine per cent to five per cent, and a one-year moratorium was introduced, effective March 1, 2020, he added.
LCCI’s report
Also, the Lagos Chamber of Commerce and Industry (LCCI) in its report on economic sustainability and business continuity sent to the Federal Government insisted on temporary suspension of the 50 per cent increase in VAT till year end.
In addition, the chamber also clamoured for 50 per cent reduction in all taxes currently being paid by companies in manufacturing for one year.
President of the LCCI, Mrs. Toni Mabaogunje, said reversal of VAT to the former five per cent was vital as it will act as incentive to businesses.
The LCCI president proposed other economic measures including tax breaks and concessions for investors, fiscal policy palliatives for the real sector, commercial banks loans facilities, aviation sector palliatives, and full deregulation of the petroleum downstream sector of the economy.
While breaking down the reforms, the LCCI boss explained that in the tax palliative category, the Economic Sustainability Committee under the chairmanship of the Vice President, Prof. Yemi Osinbajo, should suspend all forms of taxes for health sector investors (pharmaceutical companies and hospitals, medical laboratories etc.) agriculture and agro – processing, aviation and hospitality sectors for at least one year.
MAN’s position
The Manufacturers Association of Nigeria (MAN) said that this was the period government needs to consider the reduction of the 7.5 per cent VAT to five per cent for the sake of businesses and the economy.
MAN President, Engr. Mansur Ahmed, insisted that the eventual lockdown imposed by government should encourage the introduction of fiscal measures such as waivers on VAT, import duties on Active Pharmaceutical Ingredients (APIs), and other essential products.
Last line
Government should also extend tax holiday to companies on corporate tax, and reduce the burden of personal income tax as a way of increasing the disposable income of an average Nigerian worker.
