‘Over-regulation, new taxes impacting business growth, survival’

As the country struggles to ramp up revenue, private sector operators have expressed concerns about government’s resort to multiple taxation and over-regulation, noting that such actions will negatively impact growth and business survival.

According to the operators, new formal taxes, in addition to rising informal and implicit taxes impact the ability of businesses to survive and grow.

Specifically, Africa Tax and Legal Service Leader, PwC Nigeria, Taiwo Oloyede, stated that the bulk of tax evaders are in Ministries Departments and Agencies (MDAs), noting that the bulk of federal government’s revenues are with evaders.

He stated this at the Lagos Chamber of Commerce and Industry (LCCI) economic and business outlook seminar 2022, tagged: “LCCI Mid-year economic review and outlook conference” in Lagos.

He explained that Nigeria can increase its tax revenues without increasing taxes or introducing new ones while also calling for the need to repeal existing taxes.

“In his words: “The bulk of your existing revenue is with tax evaders, and even some of them are facilitated by the government. In fact, the highest tax evaders in Nigeria are in government from MDAs who collect Value Added Tax (VAT) and withholding tax that do not remit it and nothing will happen and you know in Nigeria you can do a lot of things and get away with it.”

On fuel subsidy, he projected that Nigeria will spend more than the proposed N4 trillion, pointing out that the federal government has never been honest about the cost of fuel subsidy.

“On one hand, we do not even know what we consume, which is a big embarrassment. I listened to the National Assembly saying NNPC is the sole importer of petrol and they said they imported about 63 million litres per day. How can the consumption be more than what we are importing,” he added.

Earlier, the Director General, Budget Office of the Federation, Ben Akabueze, blamed Nigeria’s inability to meet Organisation of Petroleum Exporting Countries’ (OPEC’s) quota on what he described as industrial scale crude oil theft and the rampant vandalisation of crude oil facilities.

He said that there are different business arrangements in the oil and gas sector which have different implications for government’s revenue, saying that the Joint Ventures (JVs) are the biggest hit as a result of crude oil theft and vandalisation of oil facilities since they provide the highest stake.

The president, (LCCI), Michael Olawale-Cole, said in the third quarter, many factors will weigh on growth such as CBN’s rate hike as well as the rate hikes by other central banks around the world; pointing out that rising energy costs with diesel above N800/litre, Jet-A1 at N710 per litre, and PMS selling above the government-regulated price of N165 per litre, will continue to aggravate production costs which may lead to restrained manufacturing and eventual job losses.

According to him, the worsening security situation in many parts of the country will continue to threaten agricultural production, manufacturing value chains, and logistics.

“We expect to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs. There are therefore heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022,” he warned.

He noted that the Chamber had earlier in the year projected a growth rate of 2.5 per cent for the economy, saying that the projection was anchored on the assumption of sustained high oil prices, transition to a market-reflective exchange rate system, targeted fiscal interventions, and gradual implementation of reforms in the oil sector.

“However, while these factors appear somewhat realistic, factors such as rising security tension, lingering liquidity constraints in the currency market, low vaccination rate, and lack of will to follow through with critical reforms are the major downside risks to the country’s near-term outlook,” he added.

The Chief Economist, Coronation Merchant Bank, Mrs. Chinwe Egwim, said Nigeria’s oil production is still hampered by production short ends as a result of crude oil theft between production platforms and terminals over the past month, adding that production under-performance continues to undermine revenue expectation.