- President Bola Tinubu signed 4 Executive Orders
- The Orders suspended tax increment
- Business Experts hailed Tinubu for the courage
- Nigerians expect harmonized tax regime
On Thursday, July 6, President Bola Tinubu signed four executive orders.
The first Executive order by President Tinubu is the Finance Act (Effective Date Variation) Order, 2023. This Executive order defers the implementation of changes outlined in the Act from May 23, 2023, to September 1, 2023.
However, by extending the effective date, the government ensures compliance with the stipulated 90-day advance notice for tax changes.
In any case, this decision provides manufacturers and other stakeholders with additional time to adjust their operations and align their finances accordingly.
The order also reflects the government’s commitment to transparent and predictable tax policies that support economic growth and stability.
He also signed the Customs, Excise Tariff (Variation) Amendment Order 2023 shifting the commencement date of the tax changes from March 27, 2023, to August 1, 2023, in line with the National Tax Policy.
The President gave an order suspending the five per cent Excise Tax on telecommunication services, as well as the Excise Duties escalation on locally manufactured products.
He also ordered the suspension of the Import Tax Adjustment levy on certain vehicles.
Again, President Tinubu has also suspended the 5% Excise Tax on telecommunication services and the newly introduced Green Tax, an Excise Tax on Single Use Plastics.
The Special Adviser to the President, special duties, communication and strategy, Dele Alake, said President Tinubu’s intention is to listen to the growing concerns of the Nigerian people and reduce the negative impacts of the tax adjustments, rather than exacerbate the economic challenges facing the citizenry.
According to Dr. Alake, “the President wishes to reiterate his commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions. The federal government sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation.
“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.
“President Bola Tinubu wishes to assure Nigerians by whose mandate he is in power that there will not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework,” he added.
Explaining further, he said these decisions showcase the government’s responsiveness to the concerns of citizens and businesses.
“By suspending the Excise Tax on telecommunication services, the government acknowledges the importance of fostering a favorable environment for the telecommunications industry, which plays a vital role in driving economic growth and connectivity.”
Recall that at the twilight of the departure of former president Muhammadu Buhari, several arbitrary taxes were introduced, making many tax collections in Nigeria cumbersome and even illegal.
Giving more insights into the Executive orders, Special Adviser to the President on Revenue, Adelabu Zacch Adedeji, explained that President Tinubu recognizes the importance of a sound fiscal policy environment and an effective taxation system for the functioning of the government and the economy.
‘’Nigeria ranks very low on the global ease of paying taxes while the country’s Tax to GDP ratio is one of the lowest in the world and well below the African average.
‘’This has led to an over reliance on borrowing to finance public spending which in turn limits the fiscal space as debt service costs consume a greater portion of government revenue, annually resulting in a vicious cycle of inadequate funding for socio-economic development.
‘’While some incremental progress has been recorded over the years, the outcomes have not been transformative enough to change the narrative,’’ he said.
Outlining the key challenges in Nigeria’s tax system, Adedeji stated that multiple taxes and revenue collection agencies, fragmented and complex tax system, low tax morale, high prevalence of tax evasion, high cost of revenue administration, lack of coordination between fiscal and economic policies, and poor accountability in the utilization of tax revenue as the banes of taxation in Nigeria.
Experts react to the Executive orders
However, since the issuance of the Executive Orders, experts have continued to react to the new development.
Though the orders looks more like postponing doomsday, business experts have continued to hail the President for summoning enough courage to save the Nigerian Small and Medium Enterprises from impending extinction.
This is happening less than two months after the subsidy removal, which many experts argue that the effects would have strangled millions of businesses in Nigeria.
To this end, the Nigerian Employers’ Consultative Association, NECA, has said the new Executive Orders signed by President Bola Tinubu is a right step in a right direction.
The NECA’s Director General, Adewale-Smatt Oyerinde disclosed this on Sunday in an interview with newsmen.
Speaking on the impact of the President’s recent decision, Oyerinde said it had prevented businesses, especially Small and Medium Enterprises, from collapsing.
According to Oyerinde, the Executive orders would allow the organized businesses to constructively dialogue with the government on some of the defects of the 2023 Finance Act.
In his words, “the four executive orders of President Bola Ahmed Tinubu have stopped the organized business from extinction.
“It did not stop the whole issue but temporarily stopped the business economy from sliding. It has allowed businesses to engage the government on the matter constructively.
“For now, it will stop the slide of many businesses, especially Small and Medium Enterprises”, he said.
Also commenting on the issue, Taiwo Oyedele, a fiscal policy partner and Africa tax leader at PricewaterhouseCoopers (PwC), stated that the executive orders mean Nigerians would not have to pay more for certain critical goods and services.
He said the 5 per cent excise duty on telecommunication services introduced by the previous administration posed a legal problem because Nigeria had never had excise on services but on goods like tobacco and beer.
“The customs, which is the authority that collects excise duty, doesn’t even understand how to administer it because they are used to going to factories to man the gates and collect taxes. As a result of that, the tax was never collected,” he said.
According to him, “the second problem was that the telecoms industry said they were already paying 33 different taxes.
“But the finance minister issued a gazette to say the excise duty was still in place. But what the president has done is to suspend the tax and perhaps have a more meaningful conversation on impact assessment and decide whether we want it in the current format, a different format or we don’t want it at all.”
Speaking further, he said that though the 5 percent tax never had an impact on Nigerians because it was never collected, the suspension by President Tinubu has stopped a possible increase in the cost of data and airtime, thus preventing more people from being pushed into poverty.
He also explained that suspension of the tax on single-use plastic means Nigerians will not pay more for plastic bags and bottles. This, he said, has prevented possible inflation.
He added that with the excise duty escalation on tobacco, cigarettes and alcoholic beverages, Nigerians would have had to pay more for these products.
He stressed that because they are locally manufactured, and the government has suspended the tax on locally manufactured products, the costs of purchasing these items would not go up.
Lending their voice to the new development, the Centre for the Promotion of Private Enterprises, CPPE, said President Bola Tinubu’s four Executive Orders brought instant relief to Manufacturers in Nigeria.
The Director of CPPE Muda Yusuf, disclosed this in a statement on Sunday, while extolling the President on the order.
According to him, the Executive Orders suspended the 2023 Finance Act implementation date, Excise Tariff, 5 per cent Telecoms tax and Green Tax.
He said the Four Executives Orders indicated that Tinubu is sensitive to the plights of businesses and Nigerians.
“The executive orders also demonstrate the sensitivity of the Tinubu administration to the predicament of the manufacturing sector amid overwhelming headwinds and hassles to real sector activities in the Nigerian economy”, he stated.
Meanwhile, Tinubu has set up a Committee headed by Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele, to develop better tax reforms nationwide.
While Nigerians await the outcome of the Committee, it is pertinent to note that many Small and Medium Enterprises are already gasping for breath due largely to the strangulating taxes imposed on them.
The survival of these businesses lies heavily on this Committee as many of them are already closing shops as a result of heavy and arbitrary taxation.
Again the ugly issue of double taxation to avoid paying for the services not rendered by our business entrepreneurs.