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How reduction in tariff on imported vehicles’ll spur transport sector

Maritime and transportation stakeholders clamouring for the reversal of the 2013 automotive policy which jerked up duty on imported vehicles to as high 70 per cent may soon have cause to smile as President Muhammadu Buhari, has signed a new policy document to reduce tariff on imported vehicles.
The automotive policy which created the 35 percent duty and a 35 per cent levy on imported automobile then was targeted at discouraging importation of wholly assembled automobiles to encourage local manufacturing of vehicles by indigenous automobile companies.
The main thrust of that policy was to encourage local car production/assembly plants while cutting importation through expanded import duties.
However, seven years afterwards, Nigeria’s controversial auto policy appears to have failed to achieve its desired goals as Nigeria’s domestic vehicle production capacity remains under-utilised.
last November, the Federal Government announced plan to slash the levy to be paid on imported vehicles from 35 per cent to five percent. The development was contained in the draft bill of the 2020 finance bill, which was sent to the National Assembly, which has now been passed by the lawmakers.
Shortly after the announcement of the proposed reduction, stakeholders in the local automotive sector raised the alarm that the decision would stifle local automobile industry and worsen unemployment rate.
In a swift reaction, Vice President Yemi Osinbajo said the decision to slash duty on imported vehicles in the country is not an attempt by the Federal Government to kill the country’s automobile manufacturing industry, but to reduce the cost of transportation in the face of growing economic challenges.
However, President Muhammadu Buhari has now assented to the bill in order to give room for the full implementation.
The President by his order seeks immediate compliance of the service with the directive targeted at curbing the rising cost of transport and provide a boost for the mass transit industry.
The price reduction would see import duties drop from 35 per cent to 10 per cent and even five per cent in some cases depending on the category of the vehicle.
A directive on the implementation of the new import duty regime is contained in a circular from the Nigeria Customs Service (NCS), dated February 18, 2021, and signed by Deputy Comptroller General (T&T), T.M. Isa, on behalf of the Comptroller General.
The circular had a reference number: A HMF/BNP/CUSTOM/FA. 2020/02/20 Dated 8 Feb 2021, was titled T&T/2021 CIRCULAR N0.5 Grant of the Presidential Assent of Finance Act 2020.
It read in part: “Pursuant to the assent by Mr. President to the Finance Act. 2020 to support the implementation of the 2021 Budget of Economic Recovery and Resilience, certain changes to the fiscal framework regarding the importation of specific automotive vehicles into Nigeria have been introduced.
“These reforms are designed to reduce the applicable levies and duties on vehicles, mitigate rising transport costs, boost road transportation and mass transit industry.
“Arising from the aforestated, Section 38 of the Finance Achief, 2020 modified the First Schedule to the ECOWAS Common External Tariff (CET), Etc (Consolidation) Act by amending applicable duties and levies as follows:
“Reduction of Import Duty on Fully Built Unit (FBU) of Agricultural Tractors (HSHS Headings 8701 from 35 per cent to 5 per cent as applicable.
“Reduction of Import Duty of Fully Built Unit of Motor Vehicles for the Transport of persons (cars) (HS Headings 8703 from 35 per cent to 5 per cent as applicable.
“Reduction of Import Duty of Fully Built Unit (FBU) of motor vehicles for the Transport of Goods (HSHS Headings (HSBC Headings 8704) from 35 per cent to 10 per cent as applicable.
Speaking with Daily Sun, former member Presidential Task Force for the Reform of Nigeria Customs and member Presidential Committee on port problems, Lucky Amiwero, commended the Federal Government for heeding to the agitations of stockholders over the reduction of the tariff.
According to him, government has done the best by heeding to the cry of people who have been fighting and some other agencies who have been in the forefront to ensure the tariff on importer vehicles is reduced.
He said the problem is that government actually based their concepts on increase in tariff, which will never grow the economy compared to other countries on how they built their assembly plants like what South Africa, Ghana and other countries have done in building their assembly plants.
“That is why people like us criticised the policy until they heed to our request. The issue is very clear, the real thing Government supposed to have done is government program not people’s program because that is what they do all over the world.
“If government is trying to intensify efforts to build manufacturing plants or an assembly plant, the government supposed to give them concessions. But the concession the government has given to local manufacturers is the concession that affects the public whereby it affects transportation, building of cars and all the rest,” he added.
According to him, the reduction would bring back most of the cars that have been pushed out to other countries like Benin, Togo and other areas, adding that countries like Ghana their transport system is thriving on the basis of almost zero duty while Nigeria’s own is very high.
“What government needs to do now in the area of local manufacturers is to look at what South Africa, America and other countries have done. Those countries do not use duties as the basis of protecting the local industry. What they used is concession, release and other Government monitoring factors, which is quite different to what we have done here.
“Whatever government is going to do is to do it fast by giving the local manufacturers concessions like what South Africa did. South Africa has concessions not duty. and duty was not used as the basis of protecting their primary industries. Government has to sit back and look at how these people who are invested in the economy can continue while our transport sector is improved”, he said. The President, Shippers Association, Lagos State, Jonathan Nicol, said that Government is there to serve the people and if government listens to the voice of the people, it would encourage people to work harder and getting vehicles into the country to assist transportation.
“We commend the government for listening to the voice of the people and more they have to do is to control the Nigeria Customs Service to comply with the directive. It is not after we clear our vehicles and they will arrest the same vehicles that valuation people give us invoices to pay.
“Once they said go and pay duty, let the duty be sacrosanct. You would pay duty they would still arrest the same consignment that your duty officer initially prepared; it means the Customs is divided. We don’t want a divided Customs. We need a situation where you pay your duty and ley everybody to go.
He said it only rich people that can afford locally made vehicles, adding that how many Nigerian youth can afford to buy cars for N8 million when they have a minimum of N30, 000 salary per month, which is not even enough to fuel the car?
He said Federal government should go back to the drawing board and reduce cost of doing business in the country.

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