"Wrong Timing": Experts Speak as FG Moves to Implement 5 New Taxes Covering Telecoms, Beverage, Cars
- The federal government is looking at implementing new taxes across different sectors, including telecommunication, beverage
- Experts are not happy with the timing of the taxes, especially as the Nigerians struggle with inflation
- They warned that the proposed taxes could lead to increased unemployment, smuggling, and decreased purchasing power of Nigerians
The Federal Government of Nigeria is set to impose new taxes on beverages, telecommunication, vehicle importation, among others.
One of the tax that raised eyebrows is the 5% excise duty tax on mobile telephone services, fixed telephone, and internet services.
The tax which was earlier suspended has been included in the new Fiscal Policy Measures for 2023 recently signed by the Minister of Finance, Budget and National Planning, Zainab Ahmed as reported by Punch.
Source: Getty Images
This tax applies to mobile telephone, fixed, and internet services, both postpaid and prepaid.
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Details of the new alcoholic tax
Another decision that has drawn Nigerians' attention is the revised excise duty rates on alcoholic beverages and tobacco products.
An analysis revealed that the taxes to be paid by alcoholic beverage companies have more than doubled, starting from June 2023.
The total specific rate for beer, stout wines, and spirits (per liter) has also increased by 114.3 percent from N140 to N300 last year.
Meanwhile, the specific rate for tobacco has increased by 95.3 percent from N4.2 per stick in 2022 to N8.20 per stick, as reported by BusinessDay.
The revised rates are also 76.4 percent higher than the rates the companies were supposed to pay this year before the review and 32.5 percent (N408.2) higher in 2024.
Moreover, the total ad-valorem rate levied on alcoholic beverages and tobacco products has risen by 40 percentage points to 110 percent in June from 70 percent in the same period last year.
The total ad-valorem rate for next year remains at 110 percent. Before the tax update, the total ad-valorem rate was set to be 70 percent.
Other taxes expected to come into effect include:
- 2% Import Adjustment Tax (IAT) for vehicles with engine sizes of 2 liters, 4% IAT for those with 4 liters and above 10%
- Green Tax on Single Use Plastics (SUPs) such as plastic containers, films, and bags 2%
- IAT levy on vehicles with engine sizes between 2000 cc and 3999 cc, 4% IAT on those with engine sizes of 4000 cc and above
Expert speaks
Taiwo Oyedele, West Africa tax leader at PwC Nigeria, has described the move by the federal government as an additional burden that will threaten the survival of firms in the sector.
He stressed that what the industry needs from the government now is enabling policies, not an additional tax burden.
Also, Kunle Adefolarin, an economist based in Lagos, described the new taxes as good as it will boost revenue but at the wrong time.
According to him, rather than imposing new taxes, the government should first make an effort to block leakage
Private Sector Begs Buhari as FG Announces New Taxes
Meanwhile, in another report, Legit.ng revealed that Private sector players have requested the federal government suspend the implementation of new taxes.
They warned that the proposed taxes could lead to increased unemployment, smuggling, and decreased purchasing power of Nigerians.
The group suggests that the government should instead seek fiscal reforms and reduce wastage.
Source: Legit.ng
