LCCI Seeks VAT Suspension, Asks for Tax Holiday for Manufacturers

Lagos Chamber Of Commerce and Industry (LCCI) has urged the Federal Government to suspend the implementation of the 50 per cent  increment in the Value Added Tax (VAT), among others, to be able to put the overall economy back to track.

Mrs Toki Mabogunje, president, who spoke during a briefing on the state of the economy in Lagos, said a year tax break should be granted for healthcare and pharmaceutical companies, airlines, manufacturers, agro-processors, small medium enterprises (SMEs) and hospitality players.

Mabogunje said agro-processing companies should enjoy import waivers for the next one year, adding that it is critical to support food security and agricultural supplies.

She said: “Commercial banks are implored to offer reprieve to businesses and corporates indebted to them. The reprieve could be in form of loan moratorium and restructuring.

We urge the CBN to review the cash reserve ratio downwards to 20 per cent from 27.5 per cent, to enable commercial banks have more liquidity to support businesses.

“In the aviation industry, we recommend support towards augmenting insurance premiums which are dollar-denominated as cover were mostly underwritten abroad due to lack of local capacity; support to pay for operational cost including international lease rental on grounded aircraft and maintenance (C& D-checks); full implementation of the Executive Order on Removal of VAT from Air Transportation.”

She reiterated the need for restrategising and ensuring proper coordination both at the states and federal level, urging the government to focus on the completion of critical infrastructure projects nationwide such as the Lagos-Ibadan expressway, Lagos-Ibadan rail project, Enugu Airport, the Second Niger Bridge, East-West Road, among others.

“These public goods would have significant positive impact on commercial activities and businesses as they reduce cost of doing business and boost productivity.

The private sector should be encouraged and incentivized to contribute to investment in infrastructural development,” she stressed.

Also speaking, Dr. Muda Yusuf, director general, said the Central Bank of Nigeria (CBN) cannot sustain continuous protection of the naira by depleting its foreign reserves, adding that the continuous drop in oil prices weakens the naira.

Yusuf pointed out that naira has been technically devalued, explaining that official devaluation will occur when the CBN can no longer have the quantum of dollar to defend the naira.

“Over the past 20 years, value-added per capita in agriculture has risen by less than 1 percent annually and it is estimated that Nigeria has lost $10 billion in annual export opportunity due to continuous decline in the production of some commodities, according to Food and Agriculture Organisation (FAO).

Over the years, Food production increases have not kept pace with population growth, resulting in rising food imports and declining levels of national food self-sufficiency (FMARD, 2008).

The main factors undermining production includes reliance on rain for agriculture, smallholder land holding, and low productivity due to poor planting material, low fertilizer application, and a weak agricultural extension system amongst others,” Yusuf said.