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IMF wants Nigeria to stop tax holidays

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…As Reps’ N6.1bn exotic cars malfunction 90 days after delivery***

The International Monetary Fund has advised the Federal Government to urgently revisit tax holidays and exemptions given to companies. It specifically urged Nigeria to implement a reform that would see it phase out tax holidays and exemptions eroding the Company Income Tax base.

Successive governments had granted controversial tax holidays and waivers, which were described as forms of corruption

The Washington-based Fund also asked the Federal Government to increase taxes imposed on tobacco and alcohol, emphasising the need for socially responsible fiscal adjustment based on revenue mobilisation.

The Senior Resident Representative and Mission Chief for Nigeria, Africa Department, IMF, Mr. Amine Mati, who said this in Lagos on Saturday, also stated that the Federal Government needed to reduce interest payments on borrowed funds to about 30 per cent of the country’s revenue.

According to Mati, there is also a need for Nigerian policymakers to move beyond voluntary compliance measures in tax matters in order to mobilise non-oil revenue and increase the fiscal space.

The IMF chief spoke while making a presentation at a forum organised by the Chartered Institute of Bankers of Nigeria.

In the presentation, he stressed the need to embark on full Value Added Tax and broaden it.

On monetary policy, Mati welcomed the recent “de facto” tighter monetary policy stance and said there was a need to “stop the financing of the central bank to the government and strengthen the monetary policy framework.”

On exchange rate, the IMF chief told the Central Bank of Nigeria that the “recent introduction of the Investors and Exporters FX window is welcomed and there is a need to address market segmentation; remove FX restriction; simplify/unify the FX market; and improve operations of the FX market in line with market fundamentals.”

Mati said there were significant economic headwinds amid challenges and elevated risks for the country.

He noted that the Federal Government’s Economic Recovery and Growth Plan was an important step forward, adding that important policies and steps had been taken but policy action remained urgent.

“Comprehensive policy package is needed, including front-loaded non-oil revenue mobilisation, greater exchange rate stability.”

A former President of the Chartered Institute of Taxation of Nigeria, Chief Mark Dike, described tax as a compulsory levy imposed by the government on individuals and companies for the provision of public goods and services.

As a result, he said he was of the opinion that the government should create an enabling environment and provide general incentives for companies, adding that tax waivers and holidays could create a lack of level playing field.

According to him, the government can reduce the tax rate to enable every company and individuals to pay.

In terms of using tax to generate employment in some sectors, Dike said questions had arisen on the number of jobs being created in such sectors.

The Director-General, West Africa Institute for Economic Management, Prof. Akpan Ekpo, said the government might still need to give little tax holidays in order to encourage foreign direct investments and domestic investments in certain sectors.

He, however, said that such tax holidays and exemptions should be given for only a short and definite period of time, and to only very few credible companies that had proven records.

According to him, tax holiday and waivers have been abused in Nigeria and the government needs to watch the manner such are given.

On the need to increase taxes on alcohol and tobacco, Ekpo stated that it was necessary owing to the health hazards they pose.

An economic analyst and Chief Executive Officer of Cowry Asset Management Limited, Mr. Johnson Chukwu, said there was a need for the Federal Government to overhaul the entire tax holiday system, especially in the pioneer sectors, because the current system allowed corruption.

According to Chukwu, there is a need to still give tax holidays and exemptions but it has to be only for a short period on an initial investment.

In the meantime, some of the exotic cars delivered to the members of the House of Representatives have developed faults barely 90 days after the automobiles arrived in Abuja, The PUNCH gathered on Sunday.

The majority of the lawmakers, 240 out of the total of 360, took delivery of the Peugeot 508 cars between June and July this year.

The cars, which lawmakers prefer to call “committee or utility vehicles,” belong to the National Assembly, though the members keep them in their homes.

Each unit costs N17m, which amounts to a total of N6.1bn for the 360 units for the  360 members.

House spokesman, Mr. Abdulrazak Namdas, confirmed the unit cost of the cars to The PUNCH last July.

“One car is for about N17m; yes”, he said.

Contracts for the supplies were handled by the Chairman, Committee on House Services, Mr. Bashir Baballe-Ila, and officials of the National Assembly.

Investigations showed that members started complaining of faults in the cars just weeks after taking delivery.

“There have been faulty electrical issues and mechanical challenges.

“Some members have complained that they have experienced breakdown as a result of the faults,” a National Assembly official said.

One lawmaker was reported to have abandoned his vehicle at the National Assembly Complex, Annex I, two weeks ago.

It was also gathered another member from one of the South-West states called Baballe-Ila last week and threatened to return the car for a replacement.

The Chairman of a key committee, who is from Kano State, said, “What the members are saying about the cars is true.

“There have been complaints concerning the cars for months and members are calm because the leadership, particularly the Speaker (Yakubu Dogara), pleaded for patience.”

Findings by The PUNCH indicated that some lawmakers were beginning to suspect that the cars were fairly used before the committee bought them from the original owners.

It was learnt that the Baballe-Ila committee had come under pressure in May after members began to protest that two years into their tenure; they had yet to receive their utility cars.

This reportedly happened when a Kaduna-based main supplier, initially contracted to supply the vehicles, couldn’t cope with the “large number of 360 units at a go.”

The supplier was said to have phased the delivery. But, this means that by December, many members will still be without the cars.

It was gathered that in a bid to address the supply delay, the House Services Committee chairman engaged sub-contractors to deliver more cars.

“Unfortunately, that approach too has not taken us far because as of October 27, many members still didn’t get their cars.

“The sub-contracting might have also led to these complaints of faulty cars. The sources of some of the cars are now being called to question,” one member said.

Our correspondent made attempts to get Baballe-Ila to comment on the matter but he failed to respond. Also, text messages sent to him were not replied to.

But, when asked for his reaction on Sunday, the Chairman, House Committee on Media and Public Affairs, Abdulrazak Namdas, informed The PUNCH that any faulty vehicle would be returned to the supplier because they came with warranty.

He said, “The faulty cars reported by any member will be returned.

“I am sure the chairman of the committee will handle the issue amicably. He will return the cars.

“You know there must be a warranty. And these are mechanical tools anyway; the chances that one or two cars in a large supply will have issues are not ruled out. The warranty will solve the problem.”

Asked the number of members that had received their vehicles so far, Namdas said, “about two-thirds (240) have their cars.”

This implies that up to 120 lawmakers still have no cars for oversight and other duty tours.

“We can only plead for their patience. Like I have said before, the vehicles come in batches.

“I am sure that in another few days, 50 more units may arrive,” he added.

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Economy

N672Bn: Sell-offs in Dangote Cement, MTN, Others Push Equity Down By 1.23%

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Dangote Cement, Conoil lead losers table

Selloffs in the shares of Dangote Cement, Conoil, and MTN Nigeria, among others, on Friday, dragged the equity market’s performance indices down by 1.23 percent to close the week’s trading sessions.

Specifically, investors lost N672 billion or 1.24 percent, as the market capitalisation, which opened at N54.707 trillion, closed at N54.035 trillion.

The All-Share Index also lost 1.24 percent or 1.228.32 points, to settle at 98,751.98, as against 99,980.3 recorded on Thursday.

Consequently, the Year-To-Date (YTD) return on the index dropped to 32.07 percent.

Selloffs in Dangote Cement, MTN Nigeria,  Fidelity Bank, Sovereign Trust Insurance, and Nestle made the market performance negative terrain.

Analysis of the market activities showed trade turnover drop when compared to the previous session, with the value of transactions down 22.01 percent.

A total of 367.62 million shares valued at N6.78 billion were exchanged in 9,168 deals, compared to 542.95 million shares valued at N8.70 billion exchanged in 9,650 deals posted previously

Meanwhile, Dangote Cement and Conoil led the losers’ table by percentage terms of 10 each to close at N135, and N90.90 per share respectively.

MTN trailed by 9.96 percent to close at N200.70, Thomas Wyatt Nigeria lost 9.78 percent to close at N2.03, while Sovereign Trust Insurance shed 6.52 percent to close at 43k per share.

On the gainers’ table, The Initiative Plc and FTN Cocoa Processors led by 10 percent each to close at N1.98 and N1.65 per share respectively.

Juli Plc followed closely by 9.97 percent to close at N3.75, Champion Breweries Plc gained 9.94 percent to close at N3.76 and PZ Nigeria rose by 9.93 percent to close at N33.75 per share.

On the activity table, Transcorp led in volume with trade of 57.00 million shares valued at N792.05 million, while Access Corporation sold 31.77 million shares worth N667.8 million.

United Bank of Africa (UBA) traded 28.50 million shares valued at N674.07 million and Fidelity Bank transacted 28.07 million shares worth N297.65.

Also, First City Monumental Bank(FCMB) sold 27.92 million shares worth N227.22 million.

However, market breadth closed positive with 43 gainers and eight losers on the trading floor

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Economy

Equity Market Recovers, Investors Gain N390bn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Sunu Assurances, CWG Plc lead the losers’ table

The Nigerian equity market on Thursday recovered from its three sessions losses, making investors to gain N390 billion.

Improved buy interest in the shares of Guaranty Trust Holding Company(GTCO), Zenith Bank, FBN Holdings, NEM Insurance, Juli Plc, among other top traders, pushed the market performances up.

Specifically, the market capitalization, which opened at N54.317 trillion, gained N390 billion or 0.72 percent and closed at N54.707 trillion.

The All-Share index also rose by 0.72 percent or 714 points to close at 99,980.3 points, compared to 99,266.02 recorded on Wednesday.

Consequently, the Year-To-Date return rose to 33.71 percent.

Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

Analysis of the market activities indicated that trade turnover settled higher relative to the Wednesday 5 session, with the value of transactions increased by 49.27 percent.

The market breadth closed positive with 35 gainers and 19 laggards on the trading floor.

On the gainers table, GTCO, NEM Insurance, Juli and United Bank of Africa(UBA) led in percentage terms of 10 each to close at N36.60, N6.60, N3.41 and N22.55 per share, respectively.

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Champion Breweries also gained 9.97 percent to close at N3.42 per share.

On the other hand, Sunu Assurances led the losers’ table by 10 percent to close at N1.17, followed by Eterna Plc by 9.81 percent to close at N14.25 per share.

CWG Plc trailed by 9.76 percent to close at N9.55, Morison Industries Plc shed 9.58 percent to close at N1.51 and Cadbury Nigeria lost 9.52 percent to close at N19 per share.

A total of 542.95 million shares valued at N8.70 billion were exchanged in 9,650 deals, compared to 396.23 million shares valued at N5.83 billion exchanged in 10,549 deals posted on Wednesday.

On the activity table, UBA led in volume and value with 93.71 million shares traded in deals worth N2.07 billion, Transcorp followed with 54.08 million shares traded in a value of N692.19 million.

Japaul Gold Group sold 34.33 million shares worth N65.77 million, Sterling Nigeria transacted 28.49 million shares valued at N129.15 million and Fidelity Bank sold 27.09 million shares worth N270.74.

Meanwhile, market breadth closed positive with 35 gainers and 19 laggards on the trading floor.

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Economy

NGX Opens Week Weakly, As Market Sheds N1.82trn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

 …MTN and Dangote Cement lead the Losers’ Table 

Transactions resumed on the Nigerian Exchange Ltd. (NGX), on Monday, on a negative posture with the market indices declining by 3.15 percent due to selloffs.

Specifically, the market capitalisation which opened at N57.849 trillion, shed N1.82 trillion or 3.15 percent to close at N56.028 trillion.

Similarly, the All-Share Index(ASI) also dropped by 3.15 percent or 3,330 points to settle at 102,393.23, compared to 105,722.78 achieved on Friday.

As a result, the ASI Year-To-Date (YTD) return fell to 36.94 percent.

The market was dragged down due to selloffs in the shares of MTN Nigeria, Dangote Cement, and Zenith Bank.

On the losers’ table, MTN and Dangote Cement led in percentage of 10 each to close at N247.50 and N686.70 per share, respectively.

NGX Group trailed by 9.76 percent to close at N22.20, NEM insurance dropped 9.74 per cent to close at N6.95, while Tantalizers lost 9.52 percent to close at 38k per share.

On the contrary, Juli Plc led the gainers table by 9.52 percent to close at N1.61.

Dangote Cement followed with an increase of 8.64 percent to close at 88k per share.

Sunu Assurances garnered 6.74 percent to close at N1.90, while ABC Transport gained 6.67 percent to close at 96k per share.

Nigerian Aviation Handling Company Plc (NAHCO) also appreciated by 5.86 percent to close at N30.70 per share.

On the activity chart, Guaranty Trust Holding Company (GTCO) led with a trade of 28.85 million shares valued at N1.13 billion.

Also, Transcorp sold 20.14 million shares worth N275.93 million, while Access Holdings traded 15.90 million shares worth N359.5 million.

FBN Holdings sold 15.87 million shares worth N450.74 million and Zenith Bank transacted 15.84 million shares valued at N568.04 million.

Analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 7.58 percent.

Meanwhile,  273.85 million shares valued at N7.44 billion were exchanged in 9,688 deals, compared to 342.52 million shares worth N8.05 billion in 8,395 deals on Friday.

Meanwhile, the market breadth closed negative with 36 declining stocks and 16 that appreciated.

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