The Federal
Government has raised duties on luxury goods such as yachts and Sport Utility
Vehicles (SUVs) imported into the country. But also affected are some food
items such as rice, salt and sugarcane that have local alternatives.
The plan to raise
the duties which was first contemplated by former Coordinating Minister for the
Economy and Minister of Finance, Dr. Ngozi Okonjo- Iweala under the immediate
past administration of Dr. Goodluck Jonathan had remained on the drawing board
due to Jonathan’s loss of the presidential election to the incumbent President
Muhammadu Buhari and the consequent change of officials between the former
administration and the current one.
Under the new
Economic Community of West Africa (ECOWAS) Common External Tariff (CET) regime
which administers import and export tariffs within the West African sub-region
in the movement of goods, importers of yachts and other luxury automobiles such
as SUVs, boats, sports cars, and other vessels used for pleasure are now to pay
70 per cent of the value of the vehicles as taxes (duties) to the Nigeria
Customs Service (NCS). The new rate is a jump from the 20 per cent which the
owners currently enjoy. The increase is contained in a circular by the Minister
of Finance, Mrs. Kemi Adeosun to the NCS.
Other major items
affected in the duty increase include sugar cane and salt from 10 per cent to
70 per cent; alcoholic spirit, beverages and tobacco from 20 per cent to 60 per
cent; and rice from 10 per cent to 60 per cent.
Also included on the
list are packaged cement, from 10 per cent to 50 per cent; cotton/ fabrics
materials, from 35 per cent to 45 per cent; and used cars popular known as
Tokunbo, from 10 per cent to 35 per cent respectively.
Medicaments such as
anti-malarials and antibiotics; crude palm oil; wheat flour; tomatoes paste;
and cassava products are also affected in the upward review of duties. But
essential industrial sector accessories, including bolt, industrial oil and
other equipment are to enjoy a downward review to spur local industrialisation.
The cut in the
import tariff on items for industrial use may encourage entrepreneurs whose
industries are shut down due to the high duties paid on imported components.
Such companies may resume or expand their operations as a result of the
incentives.
However, while the
new policy may trigger a rise in the prices of some consumable goods until the
demand for them is met locally, the NCS, which has been grappling with meeting
the fiscal target set for it by the Federal Government may boost its revenue.
The policy which is
coming on the heels of the recent ban by the NCS on all vehicle imports through
the land borders in the country, as part of measures to curb smuggling of
particularly used cars into the country is going to see citizens pay higher for
used cars popularly known as ‘Tokunbo.”
The smuggling of
cars into the country may have dealt a very big blow to the customs’ revenue
generation as the budget minister recently announced that the NCS’ projected
revenue for the third quarter of this year fell short of expectation by N100
billion, recording N200 billion instead of N300 billion target given to the
agency by the Federal Government.
According to the
Finance Minister, Buhari has already approved the new tariff regime.The
circular reads in part: “This is to confirm that Mr. President has approved the
2016 fiscal policy measures made up of the Supplementary Protection Measures
(SPM) for implementation together with the ECOWAS CET 2015 – 2019 with effect
from 17th October, 2016.
“Consequently, all transactions
prior to the effective date of this circular shall be subjected to the tariff
rates applicable before the coming into effect of this 2016 fiscal policy
measures.”
It added that the
approved SPM was in line with the provision of the ECOWAS CET comprising the
following:“An Import Adjustment Tax (IAT) list with additional taxes on 173
tariff lines of the extant ECOWAS CET; national list consisting of items with
reduced import duty rates to promote and encourage development in critical
sectors of the economy; an import prohibition list (Trade), applicable only to
certain goods originating from non-ECOWAS member states.”
Adeosun declared
that the current fiscal policy measures superseded those of 2015, and advised
the customs and other stakeholders to ensure strict compliance.
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