The Centre for the Promotion of Private Enterprise (CPPE) has said that the current tax regime in Nigeria is stifling investment.
Yusuf, made the call while presenting the organisation’s economic and business environment review for 2022 and setting an agenda for policymakers for 2023.
He decried a situation where other levies are instituted, for instance, in the case of Corporate tax, making effective tax higher than what government claims.
“This brings effective corporate tax to about 34%. This rate is one of the highest in the world. The average corporate tax rate for Africa is 27.6%; the Asian average is 19.52%; European Union is 19.74% and the global average is 23.37%. Meanwhile, new taxes are still being proposed by the National Assembly. These include a Tertiary Health Tax of 1% of the profit; and an NYSC levy of 1% of the profit. There are numerous other taxes imposed on businesses by the states and local governments,” he said.
According to him, the current tax regime conflicts with the National Tax Policy which prescribes that there should be less emphasis on direct taxation to incentivise investment.
“Meanwhile, investors are grappling with numerous macroeconomic, structural and regulatory headwinds. They incur huge expenditures on stuff which the government should normally provide – electricity, security, water, waste management, human capital etc. These are implicit taxes, as they were. There are also numerous state and local government taxes which businesses have to pay,’’ he said.
On Petroleum Industry Act, the former director General of LCCI stated that the enactment of the Act was a major step towards the reform of the oil-gas sector.
“It promises to transform the sector through the creation of a legal and regulatory framework that would inspire much higher levels of investors’ confidence. But we need to see a greater commitment to the implementation of the PIA. The deregulation of the petroleum downstream sector is a major economic reform imperative. This is inevitable if we must unlock investment in the sector and put an end to the perennial fuel scarcity and the monopolistic structure of the sector,” he said.
Yusuf also said there is a need to consolidate the power sector reform, adding that an enabling environment must be created to sustain current private sector investment in the sector and attract new private capital to the electricity sector. He said:
“Urgent reforms are vital concerning electricity tariff, metering and deepening of the energy mix. We need robust incentives [fiscal and monetary] to boost private investment in renewable energy.
“We should reform the budget and appropriation processes to prioritise infrastructure financing and human capital development. This would boost the productivity and competitiveness of the economy. Adoption of these reform initiatives would guarantee progression towards fiscal consolidation, reduction in fiscal deficit, diminishing need for borrowing and abating debt service burden.”