Open Letter: Drawing the Attention of Finance Minister, Customs Board on Trade Tax Policies, Others

Finance Minister

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By Eugene Nweke

Honorable we the Freight Forwarding Practitioners wish to use this medium to call your attention on your stipulated responsibilities (duties) as provided under part 2, in section 3 ( Establishment, Constitution and Proceedings of the Board), section 4 ( Powers and Duties of the Board) and section 5 ( Board to be Subject to General Control of the Minister) of the Customs and Excise Management Act. Cap C45.

For emphasis of this modest open letter, the intent is not to fault a possible ignorance of these duties but to observe the non prompt and strict administrative application and adherence to the provisions of the CEMA Act , which stipulate that the Chairman of the Board is the Honorable Minister of Finance, while the Comptroller General of Customs is the vice Chairman. The composition of the Board also includes the CBN , Trade Ministry and so many other critical organs involved in the international trading activities with the exclusion of the freight forwarders in the Board.

For all intents and purposes, the power of the Board under your control as the Chairman Board cannot be over emphasized, and from indications fiscal policies in relation to trade and other administrative functions revolve primarily from the Board, and subsequently, such board decisions influence other arms of fiscal policies formulation. However, our findings in relation to board meetings compositions before most of the recent trade fiscal policies were taken do not clearly point to decisions taken at normal board meeting where the inputs from other related Board members in participatory were sought.

In view of this consideration, this modest letter will be addressing our findings and concerns to you in your dual capacity as the Board Chairman and the Honorable Minister of Finance Federal Republic.

OUR OBSERVATIONS ON TRADE TAX POLICIES SO FAR:
From the Freight Forwarders stand point, until the Minister, the Customs and the CBN meet as often as possible to the effective adherence to the premise of the act, the trio’s would not genuinely encourage trade taxation policies that will promote or allow organizations to invest in smaller, more entrepreneurial companies and seek better returns outside the country.

By this we mean to state that, we support that foreign investment should be taxed by the government, for the sole aim of serving as an incentive to keep or retain the money here at home. By so doing, it will encourage some foreign entrepreneurial to set up shops or cottages here, so as to tap these funds, which are tax free if invested in Nigeria. Equally, there should also be more incentive to invest in high tech, manufacturing or exporting business.

WE are aware of a country where a company adheres to the 90% government relaxing rule for investment in small entrepreneurs, which is on the basis of, a dollar-for-dollar; and for every dollar an investor puts into a small entrepreneur of its country, they can invest a dollar offshore. This type of trade investment policy is desirous in our dear country, especially so, in the face of the AfCTA implementation regime.

Our findings show that, it is easier to argue that, ” by government so-called interventions, the Nigeria Manufacturers and Exporters are not at any tax disadvantage compared to some other similar developing nations manufacturers and exporters”.
But the reality is that, our Nigeria manufacturers, exporters and other likened entrepreneurs do not have advantages( a situation where a tax regime waiver is in place, but no enabling environment for its prompt utilization), they are limited by so many contending factors of productivity and marketing.

Ideally, advantages are necessary to offset the fact that Nigeria has such a domestic unstable and unfirmly regulated economy that cannot act as a springboard for the low cost exports.

The consequence being that a branch plant and products imports franchise economy under the regime of free trade liberalization scheme, merely consist of few foreign owned subsidiaries, making profitable amounts on many trading products above the citizens purchasing power average in the markets.

FINDINGS AND EXPECTATIONS OF THE FREIGHT FORWARDERS:
One of the big expectations from the Freight Forwarders is that, the NCS Board and its Chairman should appreciate better, that other than encouraging and emphasizing more of ‘Product Import Franchise”- (PIF), it should rather see reasons as to be at the forefront to foster and encourage our Nigerian manufacturers and entrepreneurial plants to obtain “World Product Mandate “(WPM) from their parents, allowing them to specialize, lower their costs and export more goods.

We posit so with humility, because, our manufacturer and entrepreneurs require a restructured huge tax breaks or even tax holidays, especially for those manufacturers and entrepreneurs who are export business oriented or related.

Our findings also show that tax breaks will give rise to criticism from other businesses sectors, such as service industries, but the good news is that, at large it will ultimately benefit and afford as many major multinationals and manufacturers the access to the World Products Mandates as a viable alternatives. The desire and concern of the Board and its Chairman should not only be limited to the revenue to obtained from the manufacturer and entrepreneurs, but on how to assist them to ensure that the made in Nigeria products flood the international markets.

This could in turn lead to more world products mandates, more exports, and more research and development here in Nigeria. Such tax breaks would increase the debts of our already deficit ridden government, and they would be a bold industrial strategy that could contribute to the nation’s wealth. In addition, it will add impetus to our active participation in the ongoing AfCTA implementation regime. We say this, in the context of the competitive edge of the manufacturers, exporters and freight forwarders in Nigeria.

TRADE TAXATION IS AIMED TO ENCOURAGE AND BALANCE THE IMPORT AND EXPORTING ACTIVITIES OF THE NATION :
Narrowing it down, it is important to emphasize that, though taxation policies may not be able to discourage the paper entrepreneurs, but they may be used to encourage the type of entrepreneurs who build projects, who creates and exports new goods or services export wise.

It is quiet understandable to admit that the past and present government has instituted one tax policy grants or rebates regime and in other forms, but the Freight Forwarders are mostly concerned with a structured and repackaged tax breaks that will encourage exploration or research and development.

In all honesty, it is well known to all that presently some manufacturers and fewer exporters get some tax breaks in the form of fast write offs, slightly lower corporate taxes, even at that, one cannot handily state of any known “no sales taxes on exports”, of which the Freight Forwarders will appreciate that more be done in this regards.

Here again, may we be quick to posit here, from point of professional experience and stand which is to say that, our FREE TRADE ZONES capacity and even its essence has been under utilized and untapped, and reasons noted from findings are not too related from a home tailored and real time tax breaks.

FURTHER FINDINGS OF IMPORTANCE AND ADVICE TO THE BOARD AND ITS CHAIRMAN ON OTHER RELATED FISCAL POLICY FOCUS:
Honorable Minister, by way of an advice to your office, the Freight Forwarders will encourage you to evolve a direct policy that, would promote the official establishment of the lobbyists registry and stating clearly the applicable and acceptable guidelines governing lobbying activities in the country. The need to curb abuses in the form of lavishing public paid decision makers with gifts, tips and other benefits,( including free flights with all expenses paid).

Finally, Honorable Minister, there is need to for you to steer the NCS Board effectively and watch closely on the activities of the Central Bank of Nigeria, especially on the aspects of conflicting monetary and fiscal policies applications. Most of these trade fiscal policies being churned out are rather more of imposition without the consent of the legislatures.

It must be strongly emphasized that the international trading environment is highly volatile and fragile, our fiscal policies over the years has not achieved its desired objectives owing to applications and associated inconsistencies ( more of changing the goal post when the match is on). We say this, because it is glaring that the nation ‘s balance of trade is still on deficit, even though other contributory factors are responsible, but an effective fiscal trade policy is a major contributor because it is the bedrock.

Going, forward we urge you to lax the present policies with the appearances of tax imposition, then please go back to the drawing board, review critical issues and concerns raised in this letter and elsewhere by stakeholders, and make adjustments for the sake of the impoverished consuming public.

We pray thee to live above board. With your effective monitoring and superintendent of the Board of Customs, so many trade related issues will be addressed evenly. Do have a positive consideration in this regard for therein lies the much needed services to the fatherland especially when and where your actions or inactions has direct impact on larger populace.

Thank You For Your Attention.

Yours in the services to our father land,

Fwdr Dr Eugene Nweke Rff Ksm.
Research Consultant – To The Congregation Of Registered Freight Forwarders Practitioners Of Nigeria.

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