The Federal Government has said that the Finance Bill 2020 was designed to reduce import duties on some commodities, including vehicles, thereby checking inflation.
This is as the Bill was part of measures to make transportation affordable, thereby reducing the cost of foodstuff across the country.
According to a report from the News Agency of Nigeria (NAN), this disclosure was made by the Minister of Finance, Budget and National Planning, Zainab Ahmed, while answering questions from State House correspondents in Abuja on Wednesday.
Ahmed explained that her Ministry advocated and got approval for a reduction in the import duties charged on vehicles precisely to check inflation trends.
What the Minister for Finance is saying
The Minister expressed concerns over the inflation rate in the country, saying inflation was high at 16.7% and still inching up gradually over the last couple of months.
Ahmed said, “When you look at the components that constitute inflation in our country, the largest contributor is food inflation and … if you decouple it, the largest contributor to food inflation is the cost of transport.
“We now look at how do we reduce the cost of transport because we can’t give every Nigerian money to pay for their transportation fares. We figured that one of the good ways to do it is to increase the acquisition of mass transit vehicles and to reduce the acquisition cost of vehicles and tractors that are used for productive purposes like agriculture.”
She expressed optimism that the reduction of the import duties on vehicles, when fully operational, would boost mass transit activities and subsequently reduce transport fares and food prices.
She said, “So the reason why we reduce those duties is to reduce the cost of transportation.
”So, once this implementation takes full effect, we are hoping that we’ll be able to see more tractors coming into the country, more mass transit buses coming to the country, reducing the cost of transportation as a result, and also having an impact on food prices.”
What you should know
- It can be recalled that as part of its bid to introduce tax incentives in the face of the economic downturn caused by the coronavirus pandemic, the Federal Government in November 2020, through the signed Finance Bill 2020, proposed the slash of import duties for tractors, buses and other motor vehicles from 35% to 10% and 0% to further help cushion the socio-economic conditions in the country.
- The Minister for Finance, Budget and National Planning had explained that the need to reduce food inflation figures through one of the causative factors of high production cost, which is transportation, inspired the bill.