By Oluyinka Onigbinde
A former acting president of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto, has urged the federal government to suspend the 15% National Automotive Council (NAC) levy on used vehicles, warning that the combination of multiple import charges, including the newly introduced 4% customs charge, will cripple the economy.
Farinto, speaking at a press briefing on Thursday, argued that imposing excessive levies without proper consultation with stakeholders would stifle trade, discourage importation, and push businesses towards smuggling. He emphasized that in countries with structured economic policies, stakeholders are always carried along before the introduction of new charges, but Nigeria’s approach to taxation often ignores this principle.
He questioned whether the government was deliberately trying to discourage Nigerians from importing used vehicles, noting that with the NAC levy and the 4% customs charge in place, vehicle prices would soar, further worsening the transportation crisis in the country. According to him, removing the NAC levy and replacing it with the new customs charge would ease the financial burden on importers while still generating revenue for the government.
Beyond the NAC levy, Farinto also called for the abolition of the 1% Comprehensive Import Supervision Scheme (CISS) charge, arguing that it has become redundant since the government has introduced other fees to cover destination inspection costs. He recommended that the 4% charge should not be implemented immediately but should be preceded by a 90-day sensitization period to allow businesses to adjust.
He further raised concerns about the proposed Nigerian Tax Bill, which includes an increase in Value Added Tax (VAT) from 7.5% to 10%. He criticized the government’s inconsistency, recalling that President Bola Tinubu had previously condemned the 7.5% VAT rate, yet his administration is now seeking to raise it further. Farinto pointed out that in many other developing countries, import-related taxes are kept below 1%, ensuring that businesses remain competitive. He warned that Nigeria’s high tax rates on imports could lead to a sharp decline in cargo throughput and increased capital flight.
One of his major criticisms was the flawed method of VAT calculation on imports, where VAT is charged not just on the cost of goods but also on duties and other fees. He argued that VAT should strictly apply to the Free on Board (FOB) value of goods, as done in international best practices. He revealed that he had previously submitted a memorandum to the authorities proposing a correction of this anomaly, but his recommendations were ignored.
Farinto also pointed out that the proposed Nigerian Tax Bill seeks to remove revenue collection powers from the Nigeria Customs Service and transfer them to a newly established Nigeria Revenue Service. He suggested that customs authorities are rushing to implement new charges before this transition takes effect, knowing that the new agency will have stricter controls over tax collection. He warned that this move, if not well-managed, could disrupt revenue inflows and complicate the import process further.
While acknowledging that the tax bill contains some positive provisions, such as allowing businesses to declare inactivity to avoid undue tax burdens, he insisted that the overall taxation system in Nigeria needs urgent reform. He urged maritime stakeholders to submit position papers to the National Assembly before the bill is passed, warning that failure to address these pressing taxation issues could further weaken the country’s economic stability.
He expressed concern that Nigeria’s tax policies are often influenced by political and regional sentiments rather than economic logic. According to him, while certain regions contribute little to national revenue, they continue to benefit from tax distributions, while sectors that generate revenue face increasing regulatory and financial burdens. He warned that if the government does not create a fair and balanced tax framework, businesses will resort to informal trade and smuggling, further eroding government revenue.
Farinto concluded by calling on the federal government to take immediate action, urging authorities to suspend the NAC levy, eliminate the CISS charge, review the VAT calculation method, and delay the implementation of the 4% customs charge to allow for proper stakeholder engagement. He insisted that these measures are necessary to prevent excessive taxation from crippling the economy and making Nigeria less competitive in global trade.
