Report Claims Reduction in Automobile Import Levy May Affect FG Revenue
A report by the Financial Derivatives Company (FDC) has expressed concerns that the recent federal government decision to reduce import duties on automobiles may affect government’s revenue generation.
The report also said the decision will equally affect the domestic automobile manufacturing sector.
According to the FDC in its latest monthly economic update, the decision by the government was equally a contradiction of the recommendation by the government committee spearheaded by the Bureau of Public Enterprises (BPE).
The committee had last year called for continued restriction by tariff on vehicles imports assembled in Nigeria as part of the National Automotive Industry Development Plan.
The report said the reduction will lead to prices of imported new cars, adding that this will affect the automobile manufacturing sector.
The FDC report pointed out that the main objectives of import levy was to raise prices of imported goods to a high level not for the purpose of increased revenue but to ensure tht prices are as high as those produced in the country.
The report added, “So while the government is set to earn less revenue from the reduced levy, the reduction in the levy is in clear contradiction of the recommendation of the Bureau of Public Enterprises (BPE)-led committee in August 2020, urging a sustained restriction by a tariff on automobiles imports that are being assembled in Nigeria in line with the National Automotive Industry Development Plan.”
The federal government had last year in the Finance Act provided for reduction in import levy on cars from 30% to 5$, tractors from 35 % to 5%.
The Finance Act also slashed import duties on transit vehicles of more than 10 persons and trucks from 35 % to 10%.
The report also said the decision will equally affect the domestic automobile manufacturing sector.
According to the FDC in its latest monthly economic update, the decision by the government was equally a contradiction of the recommendation by the government committee spearheaded by the Bureau of Public Enterprises (BPE).
The committee had last year called for continued restriction by tariff on vehicles imports assembled in Nigeria as part of the National Automotive Industry Development Plan.
The report said the reduction will lead to prices of imported new cars, adding that this will affect the automobile manufacturing sector.
The FDC report pointed out that the main objectives of import levy was to raise prices of imported goods to a high level not for the purpose of increased revenue but to ensure tht prices are as high as those produced in the country.
The report added, “So while the government is set to earn less revenue from the reduced levy, the reduction in the levy is in clear contradiction of the recommendation of the Bureau of Public Enterprises (BPE)-led committee in August 2020, urging a sustained restriction by a tariff on automobiles imports that are being assembled in Nigeria in line with the National Automotive Industry Development Plan.”
The federal government had last year in the Finance Act provided for reduction in import levy on cars from 30% to 5$, tractors from 35 % to 5%.
The Finance Act also slashed import duties on transit vehicles of more than 10 persons and trucks from 35 % to 10%.
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