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Reps Kick Against VAT Increase

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House of representatives
  • Reps Kick Against VAT Increase

Members of the House of Representatives on Monday criticised the Federal Government plans to increase the nation’s Value Added Tax from the current 5 percent to 7.5 percent.

The lawmakers said the bill scheduled for second reading this week will create more problems for the masses.

This was the same controversial bill that passed second reading at the Senate last week despite lawmakers’ objection.

Mr Richard Gbande, the Deputy Chairman, House Committee on Commerce, argued that the increment would hurt small and medium businesses and make life difficult for the poor.

Gbande, who is representing Katsina Ala/Logo/Ukum Federal Constituency of Benue State, stated that “We will always go with the masses. Our most important decision will be to see that we reduce the suffering of the masses. We don’t even need a soothsayer to tell us that our people are suffering. There is hunger and starvation in the land.

“The Committee on Commerce we will look at it; we will look at it holistically.

“We will be very objective and if the decision will cause more harm than good, then, we will advise them to put it on hold for now until a time when the people are happy and the economy has actually improved.”

Mr. Bamidele Salam said if the proposed increase would be limited to only luxury items, he would support it.

He said, “Consumption tax is a very good means of generating revenue for any country, but it has to be on luxury items. Those who want to drink Champagne or Brandy and other luxury items should pay nine per cent or more.”

The lawmaker added, “The other issue has to do with the distribution of (revenue from) VAT; that is where I am actually concerned. VAT is a consumption tax and I think 80 per cent of VAT (revenue) should be domiciled in its place of origin. The present system, to me, is unjust; where you take VAT to a central pool and then use one nebulous formula to share it. It is unjust.

“It is a consumption tax and 80 per cent of it should be domiciled in the place of consumption and 20 per cent should be remitted to the federal purse to be shared. The 80 per cent should remain in their state of origin so that those who want to take beer and pay VAT on it should use the proceeds to develop their states. Those who have banned beer, cigarette and every other things should not benefit from the proceeds of VAT.”

Mr Toby Okechukwu, the Deputy Minority Leader, explained that, “Bringing the Appropriation Bill before submitting the bill on VAT is like putting the cart before the horse. The bill should have been brought earlier so that it could constructively be part of the budget. If the National Assembly refuses it, it means that the cash flow expectations of the government will not be in place.

“Presumption (that the bill would be passed) is part of the expectation of the cash flow, but it should not include an enabling law that would allow you to implement it. You don’t make presumptions for a law; you make presumptions for expected income. If they make presumptions on law, it is wrong.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Economy

Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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Economy

FG Marches Forward With Zero Subsidy Plan

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FG Says Its Done With Fuel Subsidy After Years of Wasted Resources

The Federal Government through the Ministry of Petroleum Resources said there is no going back on zero-subsidy.

According to a statement released on Thursday by the Minister of State for Petroleum Resources, Timipre Sylva, the Federal Government can no longer bear the burden of petrol subsidy.

In the statement titled ‘Deregulation: The facts and the reasons behind the policy’, the minister said “After a thorough examination of the economics of subsidising PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians,” he said.

Sylva explained that it simply means that the government will not be the sole supplier of petroleum products but will now encourage the private sector to get involved in the business.

“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers,” Sylva said.

The minister likened the regulatory function to the role of the Central Bank in the banking sector, “ensuring that commercial banks do not charge arbitrary interest rates”.

Sylva said, “Petroleum products are refined from crude oil. Therefore, the price of crude (the feedstock) for the refining process will affect the price of the refined product.

“When crude oil prices were down, government, through its regulatory functions, ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered. At that time, we indicated that an increase in crude oil prices will also reflect at the pump.”

He said one of the reasons Nigeria has not been able to attract enough investment into the refining industry was because of the burden of fuel subsidy.

Sylva said, “We need to free up that investment space so that what happened in the banking sector, aviation sector and other sectors can happen in the midstream and downstream oil sector.

“We can no longer avoid the inevitable and expect the impossible to continue. There was no time government promised to reduce pump price and keep it permanently low.”

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