President Bola Tinubu has signed an executive order, abolishing the 5% telecom Excise tax as well as Excise Duty taxes on locally manufactured goods and services.
The move was announced by the Special Adviser to the President on Special Duties, Communications, and Strategy, Dele Alake, on Thursday during a media briefing at the State House in Abuja.
The president also signed three other executive orders, addressing tax policy concerns. They are as follows:
(I) The Finance Act (Effective Date Variation) Order, 2023, which has now deferred the commencement date of the changes contained in the Act from May 28, 2023, to September 1, 2023. This is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
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(II) The Customs, Excise Tariff (Variation) Amendment Order, 2023. This has also shifted the commencement date of the tax changes from March 27, 2023, to August 1, 2023, and also in line with the National Tax Policy.
(III) The President has given an Order suspending the 5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.
(IV). Further to his commitment to creating a business-friendly environment, the President has ordered the suspension of the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles. In addition, the President has ordered the suspension of the Import Tax Adjustment levy on certain vehicles.
The federal government said these decisions are in line with the President’s promise to run a government that will not make life difficult for Nigerians or asphyxiate corporate entities.
The move comes on the heels of the government’s decision to raise taxes and its efforts to curb multiple taxation.
“We wish to state that the intentions behind upward adjustments of some of these taxes are quite noble. They were designed to raise revenue as well as address environmental and public health concerns. However, they have generated some significant challenges for affected businesses, and elicited serious complaints amongst key stakeholders and in the business community,” Aleke said.
Manufacturers and business owners have decried the government’s decision to raise and expand the tax net amid growing economic headwinds orchestrated by fuel subsidy removal and the floating of the foreign exchange market.
Inflation, which stood at 22.41% as of May, is estimated to rise to 30% soon as a result of the policy reforms. This is expected to further squeeze the meager spending power of Nigerians.
Against this backdrop, the federal government has seen itself caught between the devil and the deep blue sea as it pushes to generate more revenue through taxation. The government has introduced an N1,000 Proof of Ownership Certificate levy for vehicles and has announced a partnership with the Market Traders Association of Nigeria (MATAN) to collect VAT from traders and the informal sector.
To ameliorate the impact of these policy reforms, the federal government has been advised to conduct an upward review of the minimum wage to boost spending power through a living wage. The government, however, said it is working with Civil Society Organizations to develop a workable framework for sustainable minimum wage.