The Managing Director of Centre for the Promotion of Private Enterprise ,CPPE,Dr.Muda Yussuf,has advised the federal government against imposing tax on gas companies in Nigeria.
He said the 50% tax introduced is not consistent with the essence of the recently enacted Petroleum Industry Act [PIA].
His suggestion came on the heels of the tax recommendations of the Finance Bill passed by the National Assembly,but withheld by President Muhammadu Buhari.
He said:”Nigeria has one of the largest gas reserves in the world of more than 190 trillion cubic feet. It is Africa’s largest gas reserves. The prospects for investment in gas have never been this auspicious, driven largely by the Russian – Ukraine conflict.
“This is a great opportunity for Nigeria to attract investors into its gas sector and take advantage of the current global high demand for gas. This is not a good time to impose a punitive tax on gas companies. Besides, the 50% tax introduced is not consistent with the essence of the recently enacted Petroleum Industry Act [PIA]”.
He also advised the government ti explore other gas flaring mitigation measures, which must be proportional to the volume of gas flared.
He maintained that policy consistency is vital to attract and retain investment in the gas sector in line with the aspirations of government as expressed in the PIA.
He added:”The act was enacted just about a year ago. We should refrain from actions that would signals of policy inconsistency to investors in the sector. This could dampen investors’ confidence”
He said the proposal in the Finance Bill to impose 0.5% levy on all imports coming from outside of Africa will be an additional burden on both businesses and the citizens.
He said it will escalate operating expenses, production costs and fuel inflation in the economy as most equipment, machineries, ICT equipment, medical equipment are all imported from outside of Africa.
According to him,imposing a levy of 0.5% on this group of items will be inimical to investment, economic growth and the welfare of the citizens.
He said:”Already, currency depreciation had made imports very expensive with profound inflationary effects. Currently, investors and citizens are paying 0.5% levy on all imports from outside of ECOWAS. This is in addition to import duty and numerous charges and levies paid by importers at the ports.
“Many manufacturers import their raw materials from outside of Africa, especially intermediate products not available on the continent. We strongly advise against the imposition of an additional levy on imports”
He condemned imposition of excise duty on all services,saying there is no jurisdiction around the world where all services are liable to excise duty.
Excise duties are typically specific and selective,he said,adding that the current open-ended provision is inimical to investment. It makes the imposition of excise duties arbitrary, indiscriminate and unpredictable.
He added:”Meanwhile, it is important to take account of the fact that practically all services are currently liable to Value Added Tax. The service sector is a very strategic sector in the Nigerian economy, contributing 54% to GDP and currently the largest contributor to government tax revenue. It also accounts for an estimated 53% of employment.
“We are concerned that companies in the service sector are already paying huge taxes in the form of company tax which is currently at 30% , tertiary education tax at 2.5%, NITDA levy at 1%, NASENI levy at 0.25%, Police Trust Fund Levy at 0.005% and withholding tax on profit distribution at 10%”