The Manufacturers Association of Nigeria (MAN) has welcomed the Federal Government’s decision to waive the 7.5 percent Value Added Tax (VAT) on Automotive Gas Oil (AGO), commonly known as diesel.
However, MAN expressed reservations about the government’s choice of a six-month timeframe for the waiver.
MAN’s Director General, Segun Ajayi-Kadir, emphasized the importance of this decision for manufacturers who rely heavily on diesel due to unreliable power supply.
He stated that the removal of VAT on diesel had been a long-standing demand from the industry.
The move to waive VAT on diesel is seen as a positive outcome of negotiations between the government and labor unions, aiming to avert a severe economic crisis.
The manufacturing sector, already facing numerous challenges, stands to benefit significantly from reduced production costs and lower transportation expenses, which would positively impact the broader economy.
However, MAN expressed concern about the temporary nature of the waiver. Ajayi-Kadir questioned the government’s rationale for the six-month timeframe, calling for transparency in the decision-making process.
He urged stakeholders to consider a more sustainable and lasting solution to address the challenges faced by the manufacturing sector.
The waiver’s impact on reducing production costs and enhancing logistics efficiency is clear, but the question of whether it will lead to a permanent and more effective solution remains a topic of discussion for the joint committee that will be established.
MAN remains optimistic that the government and private sector can work together to find lasting remedies for the manufacturing sector’s woes.