LCCI Seeks Suspension Of 50% VAT, Others Increment
The Lagos Chamber of Commerce & Industry (LCCI) has called on the Federal Government to, among other things, suspend the implementation of the 50 per cent increase in Value Added Tax (VAT) till the end of the year in view of the negatve impact of COVID-19 on businesses.
LCCI Director-General, Dr. Muda Yusuf, who made the call, said the measure, including other proposals, were necessary to save the economy from collapse.
The LCCI chief, in a statement yesterday, proposed tax breaks and concessions for investors by suspending taxes for health sector investors, agriculture and agro– processing, aviation and hospitality sectors for at least one year, saying it has become imperative to discus policy measures and reforms that need to happen for the realisation of desired continuity outcomes.
Yusuf said the Federal Government should either inject liquidity or pursue policy measures that offer some accommodation that will facilitate economic and business recovery, saying though digital platforms have become more vibrant, they were “not sufficient to generate the desired momentum of economic activities as interactions and connectivity among economic agents are at the lowest ebb.”
He called on the government to set a post pandemic rescue plan agenda for the economy.
In addition, the LCCI boss called for an extension of filling of yearly returns, including payment of due amounts to June 30.
He pushed for unconditional waiver of penalties and interests of outstanding tax payments, temporary suspension of the recently- introduced 50 per cent increase in VAT till the end of the year.
He raised raised the alarm on the sustainability and business continuity over the pandemic.
He said: “The pandemic has derailed business projections and several risks have crystallised. Businesses have been grounded by the lockdown; supply chains disrupted and aggregate demand depressed. Investment assumptions have collapsed across sectors. Businesses are faced with a force majeure and the shocks are profound and unprecedented.
“The mortality of Small Medium Enterprises (SMEs) is set to heighten as they have tenuous capacity to absorb shocks, especially of a scale that we are witnessing,” he said.
To save the economy from collapse, Yusuf canvassed the need to salvage investments across all levels, including micro, small, medium and large enterprises, pointing out that without investments, there can be no jobs, as aggregate demand would remain weak and government revenue in jeopardy as tax revenue plummets; and economic sustainability will be at risk.
On employees, the LCCI chief said PAYE (Pay As You Earn) should be suspended for six months, saying: “This would put some money back in the hands of the employees during this period to strengthen the purchasing power of citizens and stimulate output within the economy.
He said this measure was in addition to asking that health workers’ PAYE should be suspended for one year in recognition of their role as frontliners in the battle against the pandemic.
Yusuf said similar measures had been implemented in other climes, saying Nigeria should take a cue and do the same.
On examples of tax palliatives in other countries, he said in India – filing of General Sales Tax (like VAT) was delayed for three months, including United Kingdom,
UK – VAT payments delayed by three months while in United State Personal Income Taxes were delayed by three months and in Ghana health workers exempted from taxes for three months, among others.
On Fiscal palliatives for the real sector, he suggested that health sector raw materials and equipment should attract zero import duty to incentivise greater private sector investment in the health sector, while manufacturing raw materials and intermediate products should attract import duty waiver for six months.
According to him, one key lesson of the Covid-19 is the imperative of domestic production and building capacity for self-reliance. He added that the global supply chain disruptions took a heavy toll on the manufacturing sector.
Other are that agro-processing input should enjoy import duty waiver for one year, suspension of excise duty payment for manufacturers for one year and greater commitment of government and its agencies to the patronage of made in the Nigerian products.
The LCCI chief also made case for import duty waiver on machinery without need for any bureaucracy, for at least 12 months to facilitate the completion of ongoing projects by industrialists as the country, according to him, needs growth to encourage job creation.
He urged commercial banks to take a cue from the central bank and offer some reprieve to their customers on existing facilities.
He said: “It is gratifying that at a recent meeting of the Bankers Committee it was resolved, among other things, ‘that profit will not be the primary motive at this time, rather preserving confidence, financial stability, and support for the economy will be overriding objectives’,” he added
