The Group Managing Director/CEO of UAC of Nigeria PLC (UAC) has called for the enthronement of an economic management strategy that seeks consistency in fiscal policies in the country to boost genuine industrial development.
In his address titled ‘’Consistent Government Fiscal Policy: A Key to Sound Industrial Development’’ delivered at the Mid-Year Meeting/Dinner of the Pharmaceutical Society of Nigeria (PSN) Board of Fellows at the Golden Tulip Festac Hotel, Amuwo-Odofin, Lagos, Mr Ettah said: ‘’Consistency of fiscal policy whether relating to taxation, budgets and spending, tariffs and industrial incentives, economic diversification and other elements of government policy are sine qua non for successful industrial development. That way, businesses - local and foreign - can take investment and strategic decisions knowing (rather than praying) that they will stay at least into the medium and long term.’’
Recalling the effects of taxation, charges and dues on entrepreneurship in the country and the perennial issue of the multiplicity of taxes, rates, charges and dues applied by the three (3) levels of government: federal, state and local, he said:‘’My personal position is that government should reduce company income taxes applicable to the productive economy and scrap capital gains tax. We also hope that all governments will find the political will to actually streamline taxes, charges and rates nationwide as provided by Act 21 of 1998 and improve collection efficiency generally, rather than concentrate tax raising efforts on a few socially responsible individuals and companies.’’
The UAC Chief Executive further stated that government must also rationalise the cost of regulatory compliance and the conflicts and overlaps between regulatory institutions.
Commenting on the tariffs and fiscal incentives in the country, he said: ‘’Nigeria’s current tariff structure does not pay sufficient attention to the reality that the productive sector in Nigeria suffers a cost disadvantage relative to other economies that may be as high as 40% due to power, infrastructure, logistics, corruption and other operating costs.’’
He pointed out that the major weakness of fiscal policy in the country was the skewed structure of the budget balance in favour of recurrent expenditure, which tended to average 75% of budgeted expenditure, leaving only approximately 25% for capital expenditure. ‘’The effect of this arrangement has been severe under-investment in infrastructure - schools, roads, rail lines, bridges, power installations etc, while salaries and overheads and running costs of government ministries, departments and agencies consume the bulk of public spending. This unwise structure now accounts for the sapping infrastructure deficit that now plagues the nation.’’
He captures the current fiscal challenges facing the economy thus: ‘’Economists do not of course expect a situation in which N100 of spending results in N90, N50, N10 or even N5 of value while the balance is diverted into private savings or spending, often in an offshore economy by public officials and their contractors, allies and fronts. That is the dilemma of fiscal policy in Nigeria and as long as corruption is endemic in the process of government procurement and spending, the aims of fiscal policy in relation to employment, income distribution, economic growth and price stability may not be achieved.’’
Citing the 2011 “Blueprint for Accelerated Development of Manufacturing in Nigeria” by the Manufacturers Association of Nigeria, he listed the factors affecting businesses in the country to include tax structure particularly company tax, Personal Income Tax; multiple taxation/levies, ineffectiveness of the government procurement policy; unbridled approval of waivers and concessions to groups and individuals to import products at concessionary duty rates; non-inclusion of overhead costs of manufacturing companies in the calculation of input-output VAT; re-introduction of Customs Duty on importation of plants and equipment, which makes retooling and expansion more expensive; absence of incentives for providing own-infrastructure and utilities by manufacturers and the implementation of minimum tax which is inimical to the survival of ailing industries.
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MIKE ASUQUO, PR MANAGER, UAC - +2348035026139