The clamor for Nigerians to patronize locally made goods in order to boost local production and encourage indigenous entrepreneurs has been going on for a while. The Federal Government has therefore taken a huge and wise step to seek more revenue sources by increasing the import tariffs of luxury goods and some indigenous goods.
With its depleting foreign reserves which fell to an 11-year low of $24.8 billion in 2016, Nigeria’s government has sought to curb its imports for much of the past year.
The government had no other choice than to raise import duties on yachts, sports cars and food items. Generally, the government has defended its higher tariffs and import bans by urging Nigerian to turn to local alternatives. But in the same vein, the government stands to earn more as it seeks more revenue sources amid an economic slump.
The luxury and consumable items that have local alternatives but are imported into the country are also attracting higher import duties. This means that there might be a rise in the prices of some consumable goods until the demand for them is met locally.
Every citizen of the country has a quota to contribute to the growth of the country’s economy. In order to make this work, individuals should see the recent development by the Federal Government as a step to make things work for the country positively.
The cut in the import tariff on items for industrial use may encourage entrepreneurs whose industries are shut down due to the high duties paid on imported components. Such companies may resume or expand their operations as a result of the incentives
According to the Finance Minister, Buhari has already approved the new tariff regime. The circular reads in part: “This is to confirm that Mr. President has approved the 2016 fiscal policy measures made up of the Supplementary Protection Measures (SPM) for implementation together with the ECOWAS CET 2015 – 2019 with effect from 17th October, 2016.
“Consequently, all transactions prior to the effective date of this circular shall be subjected to the tariff rates applicable before the coming into effect of this 2016 fiscal policy measures.”
It added that the approved SPM was in line with the provision of the ECOWAS CET comprising the following:“An Import Adjustment Tax (IAT) list with additional taxes on 173 tariff lines of the extant ECOWAS CET; national list consisting of items with reduced import duty rates to promote and encourage development in critical sectors of the economy; an import prohibition list (Trade), applicable only to certain goods originating from non-ECOWAS member states.”
Some of the goods which will be attracting higher tariffs include SUVs, boats, sports cars and other vessels used for pleasure. The import duty for yachts and other luxury automobiles have been increased from 20% to 70%. Importers of these are now to pay 70% of the value of the vehicles as taxes (duties) to the Nigeria Customs Service (NCS). Meanwhile, duties for used cars popular known as Tokunbo, has been increased from 10% to 35%.
Sugar cane and salt- The import duty for sugar cane and salt which used to be 10% has now been increased to 70%.
Alcoholic spirit, beverages and tobacco- Importers of alcoholic spirit, beverages and tobacco are now to pay 60% of the value of the goods. The new rate is a jump from the 20% which they currently enjoy.
Cotton and fabrics materials- The 35% enjoyed by importers has been increased to 45%.
Rice- The federal government has increased the tariff on imported rice from 10% to 60%.
Packaged cement- It has been increased from 10% to 50%. The cut in the import tariff on items for industrial use may encourage entrepreneurs whose industries are shut down due to the high duties paid on imported components. Such companies may resume or expand their operations as a result of the incentives.
Some drugs such as anti-malarial and antibiotics, crude palm oil, wheat flour, tomatoes paste, and cassava products are also affected in the upward review of duties.
By Victoria Johnson