The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has warned that the recently passed 2022 Finance Bill could lead to the shutting down of many companies, thereby worsening the unemployment crisis in the country.
John Udeagbala, national president and chairman of council said in a statement on Monday, that the scarcity of forex, poor business environment, high cost of energy amongst other macroeconomic indices are heavy weights that toll against businesses, especially the organised private sector.
“Any further tax increases on businesses may simply lead to shutting down of many companies and worsen the already bad unemployment crises in the country,” he said.
Udeagbala added that the finance bill attempts to add more financial burden on the private sectors that are presently struggling to keep businesses afloat. “We are worried about the negative impact the bill will have on the growth and development of the Nigerian private sector.”
Earlier in December, the Federal Executive Council approved the Finance Bill for transmission to the National Assembly for consideration and passage. That same month, the bill was passed by the National Assembly.
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The bill is anchored on five fundamental policy drivers, including tax equity; climate change; job creation/economic growth; tax incentives reform and revenue generation/tax administration.
Some of the provisions in the bill include the imposition of excise duties on all services with rates to be determined by presidential order, the imposition of a 0.5 percent tax on all eligible imports from non-African countries to fund Nigeria’s obligations to international organisations and the increase in TET from 2.5 percent to three percent of company profits.
NACCIMA’s president said it is barely two years now since the government raised the education tax from two percent to 2.5 percent, many companies are struggling to adjust to that and now the same is being raised to three percent.
“Value Added Tax has also been raised from five percent to 7.5 percent over the same period. This is besides over 50 other forms of taxes and levies being imposed on the Organised Private Sector of Nigeria (OPSN) by both federal, states and local governments,” he said.
He added that there are yet other tax bills currently at the National Assembly seeking to impose taxes and levies on business establishments and companies, such as the National Information Technology Development Agency levy, National Social Insurance Trust Fund, Company Income Tax among others.
Considering the various challenges and economic difficulties faced by the OPSN, the NACCIMA’s boss expects the government to encourage rather than discourage the real sector through policies that promote ease of doing business.
“Where government fails to lighten the already heavy financial levies and taxes on the OPSN, then further burden should not be placed on the struggling businesses of the OPSN,” he said.
The association recommends expanding tax-net to a greater number of taxable businesses and the working class, and not increasing tax rates.
“The focus should be for government agencies to search out companies that are not paying taxes presently to increase their tax base and not to suffocate businesses by increasing tax rates.
“Create and maintain an enabling environment that is investment friendly. This will entail enunciating and maintaining policies that remove bottlenecks to business investments,” it added.
