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Customs mulls vehicle duty review to 10%

Customs mulls vehicle duty review to 10%

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Customs Comptroller-General,  Col. Hammed Ali (rtd) has said the Service is seeking a downward review of automobile duty  to 10 per cent.

Ali, who spoke yesterday during the 2019 International Customs Day celebration in Abuja with Smart Border for Seamless Trade, Travel and Transport as its theme, said importers were complaining that the existing 35 per cent is too expensive, adding that they have resorted to using ports of adjoining countries.

”So we are advising and we will continue to do that, that government should review the levy. And we are asking that it should be reviewed close to about 10 per cent. If you do that, it means that collecting duty from new vehicle will be about 45 per cent as 35per cent is the duty and 10 per cent is the levy.

“I am sure that with that, we will get an increase in the volume of importation, save the lives of our people because smuggling will reduce, and therefore, we will increase the intake in terms of revenue and therefore the economy will develop.”

Also, the Lagos Chamber of Commerce and Industry (LCCI), yesterday described the Automotive Policy of former President Goodluck Jonathan’s administration as a failure and called for its review.

Ali said the decision to increase the duty to 35 per cent for used vehicles and 70 per cent for brand new ones was taken to discourage importation of automobile into the country in order to encourage local manufacturing.

He, however, said the implementation of the policy has not yielded any positive results several after.

He said: “What I suggested, is on Automative duty. If you know how the duty has been shared; we have 35 per cent duty. But if you import a brand new vehicle to Nigeria you pay 70 per cent duty. From what we have done, analysis and statistics, I discovered that this duty has now driven most of our importers to our neighbouring ports.

“Also, it has increased the rate of smuggling into this country. Having interacted with our stakeholders, what we discovered was that the sudden increase in duty is what is driving them to other ports. And the 35 per cent was for us to encourage our own automative industry in order to ensure that we develop, but 20, 30 years down the road, we cannot develop it and we are giving away a lot of money. It does nothing, it is a waste. We have reduced that.

Its Director-General, Mr Muda Yusuf said the Nigerian Ports Authority (NPA), the Nigerian Maritime Administration and Safety Agency (NIMASA), the NCS and other government agencies at the ports,  are losing  revenue and business to neighboring countries as more vehicle imports are diverted to neighboring ports and smugglled into the country.

Yusuf said five years after its introduction, the policy has not only failed to achieve the desired outcomes, but has adversely impacted the cost of doing business, welfare of the people, government revenue and the capacity of the economy to create jobs.

Yusuf said the Jonathan policy has also penalised stakeholders in the sector that are compliant with extant rules, taxes and tariffs applicable to the automobile sector.

He said: “The cost of vehicles had risen beyond the reach of most citizens and corporate bodies.  The impact has been largely negative with far reaching consequences.

“The automobile sector was hit by the double shock of over 100 per cent currency depreciation over the last five years and an import levy of 50 per cent on new cars and 25 per cent on used vehicles and commercial vehicles.

This is in addition to the import duty of 20 per cent on new cars and 10 per cent on used vehicles and commercial vehicles.

“However, import substitution strategy thrives in the context of high domestic value addition.  It is within such a framework that the economy could benefit from the inherent values of import substitution.

The auto policy, the LCCI chief said, in its present form, is most inappropriate for an economy that is heavily dependent on road transportation.

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