The Finance Bill 2022, to which President Muhammadu Buhari on Tuesday refused to give his assent due to apparent inconsistencies, has been the subject of a comprehensive review request from the Centre for the Promotion of Private Enterprise (CPPE).
The measure, according to a statement from CPPE, was swiftly approved by the National Assembly without participation from significant parties.
There is no place for a public hearing and participation with stakeholders in the discussion of the law, according to a statement issued by Dr. Muda Yusuf, the founder and CEO of CPPE.
“This is a piece of legislation that has profound implications for investment, citizens’ welfare and the Nigerian economy. It is curious and puzzling that the Senate gave just 24 hours notice for stakeholders to attend a public hearing on the bill. The public notice was published on 21st December 2022 for a public hearing scheduled for 22nd December 2022. There is no better expression that to say there was a deliberate exclusion of stakeholders from this important legislative process,” CPPE said.
It was mentioned that the House of Representatives provided a notice period that was about three weeks longer.
“But in a sudden and baffling twist of events, the House passed the bill before the date of the advertised public hearing, which was 13th January 2023.”
In order to pay for Nigeria’s obligations to international organizations, the Finance Bill 2022 included provisions such as the imposition of excise duties on all services, with rates to be determined by presidential order, the imposition of a 0.5% tax on all eligible imports from non-African nations, and an increase in the tertiary education tax from 2.5% to 3% of company profit.
“All of these have far-reaching implications for investors and citizens. It will affect the cost of production; it will affect the operating cost and would undermine investors’ confidence. It has profound inflationary implications. It will effectively move corporate tax to almost 35 percent which is one of the highest globally,” CPPE noted.
It added: “Currently, corporate tax is 30 per cent, there is tertiary education tax of 2.5 percent, NITDA tax of one per cent; NASENI Levy of 0.25 per cent; Police Trust Fund tax 0.005 percent.
“Meanwhile, the National Assembly has already passed a bill imposing one per cent tax for NYSC fund (awaiting the assent of the president) and another one per cent Tertiary Health Levy is being planned.
“In the meantime, investors are grappling with macroeconomic headwinds including depreciating exchange rate, illiquidity in the official forex window, spiking energy cost, weak purchasing power, rising interest rate and surging inflation.
“Companies currently pay a multitude of taxes, fees, levies to state governments, local governments and regulatory agencies. This is not the way to promote economic recovery, job creation and poverty alleviation. Already 133 million citizens are in extreme poverty. These measures would further impoverish the citizens as these additional taxes would be ultimately borne by them.”
The advocacy organization urged Buhari to “not leave a legacy of onerous tax burden on investors in the Nigerian economy,” claiming that the current state of affairs is ruining firms.