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Business News

NBC, Rite Foods, others to pay new tax as FG identifies new revenue streams 

The NBC and other manufacturers of carbonated drinks may have to start paying excise duties as the FG identifies new revenue streams.

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taxes, tax, IMF, business, FAAC disbursed N617billions in April, as South-South scoop N72billions, VAT, Finance Minister, Zainab Ahmed says Nigeria VAT collection rate is low, NBC, Rite Foods, others to pay new tax as FG identifies new revenue streams ,,Finance Minister reveals how World Bank, AfDB pushed FG into requesting Chinese loan 

The Nigerian Bottling Company (NBC), Rite Foods Plc and other manufacturers of carbonated drinks may have to start paying excise duties as the Federal Government identifies new streams of revenue to help boost its revenue base.

This was announced by the Minister of Finance, Budget and National Planning, Zainab Ahmed on the sidelines of the World Bank/International Monetary Fund meetings holding in Washington DC, United States.

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Ahmed made it known that since the Value Added Tax increase had been proposed, other streams of revenue the government was considering include the introduction of excise duties on carbonated drinks.

[READ MORE: IMF: Increase tax rate to manage fiscal crisis?]

Carbonated drinks include soft drinks like Coca Cola, Fanta, Bigi and excise duties are taxes levied on locally produced goods. Nairametrics understands that currently, excise is placed on non-alcoholic beverages, fruit juices, beer, stout and alcoholic beverages as shown on the website of the Nigeria Customs Service.

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excise duties

Speaking further, Ahmed stressed the importance of taxes and the plans of the government in ensuring citizens pay tax.

“There is also a proposal to build tax rates for SMEs. We also increase the minimum tax level to make it easy for people to plan their taxes. Nigeria, we don’t have adequate social contract. The government was not asking for or enforcing tax collection and, therefore, taxpayers also were not taking up their civic responsibilities. This is because we are largely dependent on oil revenue and people are not used to paying taxes.

“Very recently at the Nigeria economic summit, they shared a citizens survey and 75% of people that was surveyed said ‘we don’t think there is anything wrong in not paying taxes and it is not a problem’ and there was a few that said ‘I don’t see what the taxes are used for. So, why should I pay tax’?

We have a very low tax morale. We are planning a strong strategic communications process to educate people on why they need to pay taxes. Because we rely heavily on oil and it is not going to be there forever. So, we have to boost domestic revenue generation and use tax revenue to develop their economies and Nigeria should not be an exception.

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[READ ALSO: FG moves to clamp down on tax evaders in mining sector]

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“In expanding the revenue base, we have proposed the increase of VAT but there are also other revenue streams that we are looking at and some of them include the introduction of excise duties on carbonated drinks but there is a process to doing these things.

“The fact that our revenue is underperforming is not an excuse to bring down our revenue that is required to fund the national budget.”

Chidinma holds a degree in Mass communication from Caleb University Lagos and a Masters in view in Public Relations. She strongly believes in self development which has made her volunteer with an NGO on girl child development. She loves writing, reading and travelling. You may contact her via - chidinma.nwagbara@nairametrics.ng

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Economy & Politics

Just in: Buhari seeks approval from green chamber to borrow fresh $5.5billion

Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

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President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.

This request was disclosed via the official twitter handle of the House of Representatives.

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The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.

In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.

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Details shortly…

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Business News

CBN’s MPC unlikely to cut rates, as Nigeria’s foreign reserves hit $36.16 billion

Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira.

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CBN, GTBank, CBN disagrees with IMF, says land border closure boosting local production, Border closure: Emefiele says Benin, others must engage Nigeria before borders are reopened , bvn 2.0, CBN reveals banks’ foreign assets rise to N14.19 trillion in 2019

The CBN’s Monetary Policy Committee (MPC) is expected to leave the interest rate of 13.5% unchanged during its meeting later today.

The projection is coming on the heels of macroeconomic fundamentals released by the National Bureau of Statistics (NBS), which showed that inflation rose to 12.34%; its seventh consecutive monthly rise and highest level since April 2018.

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Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira. Therefore, in order to minimise the risk of exacerbating inflationary pressures, the CBN is unlikely to further cut rates. This possible outcome from the MPC meeting will help stimulate economic growth, just like it did in 2019.

Meanwhile, despite the foreign exchange liquidity crisis being experienced in the currency spot market, data obtained from CBN revealed that the country’s foreign exchange reserves have further increased to $36.16 billion (Gross Estimate) as of 28th of May, 2020.

(READ MORE: Naira depreciates to N460/$1 at the parallel market, despite improved liquidity)

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The surge in Nigeria’s external reserves is due to the fact that the price of crude had gained more than 40% since the deadly COVID-19 pandemic started, coupled with reports that foreign investors are returning to Nigeria. The disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to CBN has also been a contributing factor.

Nigeria’s foreign exchange reserves hit $36.16 billion, Nigeria’s Central Bank MPC meet today

Recall that the CBN Governor, Godwin Emefiele, had promised more liquidity in the currency market, assuring that all genuine dollar demands would be met.

However, an Interest rate expert, Ola Oladele, during a phone chat with Nairametrics, advised that the CBN should keep its word by boosting Nigeria’s Forex supply as the persistent downtrend in the currency black market continues. She said:

“The depreciation of the naira in the parallel market as a result of low supply of FX from official sources and less optimistic outlook on the economy due to falling oil prices.

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“The BDCs haven’t received supply from official sources since our borders were closed and the crash in oil prices has made natural sellers of FX more cautious.

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“We hope that the recent statements by the regulator will restore confidence and subsequently, supply to the market.”

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Economy & Politics

Fourth Mainland Bridge to begin before December

The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.

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Fourth Mainland Bridge to begin before the end of 2020

The Lagos state government has announced that in line with its vision for a smart city, work on the Fourth Mainland Bridge, will commence before the end of year 2020.

In addition to this, construction of the Lekki Regional road will also commence within the next seven months.

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Special Adviser to the Lagos State Governor on Works and Infrastructure, Engr. Aramide Adeyoye disclosed this during the Ministerial Press briefing organised by the State Government  

The architectural design done by NLE works proposed a design speed of 140km on the bridge, with 8 interchanges to facilitate effective interconnectivity between different parts of the State, and a Four-lane dual carriageway with each comprising 3 lanes and 2metres hard shoulder on each side.

(READ MORE: British High Commission releases flight schedule for final evacuation)

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The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.

The proposed 38 km long fourth mainland bridge is expected to run through Lekki, Langbasa and Baiyeiku towns along the shoreline of the Lagos Lagoon estuaries, further running through Igbogbo River Basin and crossing the Lagos Lagoon estuaries to Itamaga Area in Ikorodu. It will then cross the Itoikin road and the Ikorodu – Sagamu Road to connect Isawo inward Lagos Ibadan Expressway at Ojodu Berger axis.

All of these routes are known to be traffic prone areas, and the construction of the bridge will ease traffic on these routes, thus reducing commute time for residents.

Recall that in April, the state government had shortlisted about 10 firms out of the 32 that expressed interest in the construction of the fourth mainland bridge. The bridge was estimated to be worth about N844 billion.

According to Engr. Adeyoye, the 10km long Lekki regional road will span “Victoria Garden City Scheme 1, connect VGC, Ikate Elegushi, Ikota, Chevron Drive, Ajiran, Pinnock Beach Estate, Gracefield Island and Orange Island, up to Freedom Road to Freedom Way at Lekki”

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Upon completion, this road will greatly ease traffic along the axis, serving as an alternative to the Lekki-Epe Expressway, which is already congested and is currently the only road serving the Lekki sub-region which connects directly to the Osborne/Third Mainland bridge corridor, Adeyoye assured.

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(READ MORE: LIRS further extends deadline for filing annual tax returns by one month)

More projects to come

Adeyoye noted that there are other ongoing projects such Agege-Pen Cinema, Agric-Ishawo Road and the Lagos-Badagry Expressway, as well as the infrastructural upgrade of Oniru network of roads, namely Muri-Okunola Extension, Ligali Ayorinde and Akin Olugbade, along with seven major junctions in Iru-Victoria Island Local Council Development Area.

Completed projects listed by Engineer Adeyoye include Iworo-Ajido and Epeme Roads phases 1 and 2, and the 6.65km two-lane single carriageway with a 300m bridge of 9m width, which was constructed by CCECC.

 

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