*Tasks govt on improved business environment
Dike Onwuamaeze
Operators in the organised private sector have commended the federal government for removing 7.5 per cent Value Added Tax (VAT) on the price of diesel, and told the federal government to evolve a holistic plan that would address operational difficulties hindering the competitiveness of the OPS.
These views were shared by the Director General of Nigeria Employers’ Consultative Association (NECA), Mr. Adewale-Smatt Oyerinde and the Director General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona.
Oyerinde described the removal of the VAT on diesel as a commendable palliative for all Nigerians, but added that it did not feature in the three topmost priorities of the organised businesses.
He said: “In the context of the priorities we want government to address, the removal of VAT of 7.5 per cent on diesel would not have been our first priority. It may not even rank among the first, second or third priorities that we will want government to address.
“I said that whatever palliative the government gives will be neutralised if the government will not address enterprise sustainability. This is why we said that it must address the income side and the production side concurrently so that one does not neutralise the other.”
“We have the issue of multiple taxations, which is being addressed addressed.
“The President in his August broadcast said that N75 billion will be given to manufacturers and some billions for the MSMEs. Our priorities include definitive timelines on when these funds be released? A third priority for us is how to address the issues surrounding availability of foreign exchange, which is becoming a big challenge in buying inputs. It is progressively making a mess of our projections. You cannot plan when the issue of foreign exchange continues to escalate.”
In its reaction to the removal of VAT on diesel, the LCCI commended the federal government in a statement.
But, it noted that the chamber was deeply worried about the high operating costs businesses and households face due to high inflation, high interest rates, and weakening local currency.
Almona said, “the LCCI wishes to commend the federal government’s decision to suspend the VAT on diesel temporarily. We were particularly concerned about the additional cost of 7.5 per cent diesel tax on business operations and its transmission to final consumers.
“The suspension of VAT temporarily on diesel in response to the current economic challenges is laudable. This is comparable to recent VAT rate adjustments across European countries where lower VAT rates on gas, electricity and basic supplies were implemented by EU-member states in response to economic challenges.
“For example, in Germany, to ease the burden of inflation, the VAT rate was reduced on natural gas from 19 per cent to 7.0 per cent until March 2024. Also, Belgium cut down energy costs permanently by 6.0 per cent, while the Netherlands reduced VAT on natural gas, electricity, and district heating from 21 per cent to 9.0 per cent. In Ireland, VAT on gas and electricity is reduced to 9.0 per cent for six months.”
She said inasmuch as the, “chamber supports the temporary VAT holdup, it is, however, deeply worried about the high operating costs businesses and households face due to high inflation, high interest rates, and weakening local tender. Policy remedies like this are important to jump-start/revive the economy, particularly the MSMEs, services, and manufacturing sectors.
“The chamber suggests that to relieve businesses and consumers during this period of debilitating inflation, the government should extend reductions in VAT rates to other energy, fuel, and gas prices as well as staple food items.”
