Importers and freight forwarders in the nation’s maritime industry have criticized the recent slash of Customs duty payable on automobiles from 35 per cent to five per cent, they argued that the reduction which is only applicable to new vehicles should also apply to imported used vehicles.
Speaking to our correspondent on the recent slash, a car importer Mr. Yemi Adedoyin who sell vehicles at the popular Berger auto mart in Lagos, alleged that the policy was meant to favour the rich only. He explained that the slash only applies to new vehicles, while stating that only less than 10 percent of the working class can afford to buy a new car.
He urged that the government should consider the middle class whose saving can only afford Tokunbo (used vehicles).
According to him, “there is nothing to be happy about, the slash in import duty is meant only for the rich, how many people can afford to buy new cars in Nigeria, even the Tokunbo, how many people can afford to buy it.
“If you look at this policy, it is only meant to favour the rich, our government only thinks about themselves alone, I import new vehicles only when a customer demands for it, and in a year I don’t sell more than five new vehicles, compared to the used ones”
“So, when I see people jubilating that the government has reduced import duty on vehicles, I ask, does that apply to you. Government should make the policy to be across board not for selected few, after all they know they are the ones who buy most of these new vehicles.
“If you will recall, do you know the numbers of brand new vehicles given to the House of Assembly members, I believe they can revisit the policy and make it across board”, he said.
Also speaking, a maritime lawyer and Senior Partner at Akabogu & Associates, Barr. Emeka Akabogu criticized the recent slash in customs duty payable on automobiles from 35 per cent to five per cent, stating that the duty slash should be made across the board and not on selected automobiles.
In a statement posted on his official LinkedIn page, Akabogu stated that:“Last Thursday the Nigeria Customs Service (NCS) released a much-expected circular for the implementation of the Finance Act 2020 provisions purporting to reduce import duties payable on automobiles.
“Contrary to what most assume, import duty has not been reduced for cars. The Finance Act and the implementation circular reduced import duties for agricultural tractors, vehicles that transport more than 10 persons and vehicles for the transport of goods. Import duty for cars remains the same (35 per cent), while import levy which exists for brand new cars is reduced to five per cent. So if you want to import a brand new car today, your cumulative duty and levy will be 40 per cent, while for ‘tokunbo’, it will be 35 per cent.
“My interest in this issue is from maritime industry development and trade facilitation perspectives. No doubt, the reduced import duties are a major step forward in pushing the agenda for more inclusiveness in that economic space. However, my submission is that the reductions do not go far enough for the purpose of achieving trade facilitation and maritime industry development.
“Amongst some other reasons, high import duties constitute one of the key drivers of car smuggling, which impacts economic activity in Nigerian ports negatively. Contrary to official theories, high import duties do not necessarily translate to increased Customs revenues from imported cars; it rather fuels smuggling through neighbouring countries and the vehicles end up paying no official duties. In addition, the port economy is robbed of terminal storage and handling income in addition to the cluster of support services that rely on car imports value-chain.
“From a trade facilitation point of view, the vehicles imported through Nigerian ports are made to remain in the ports for long periods of time due to inability of importers to clear, accumulating demurrage and disrupting the import process for other imports.
“If the government thought it fit to reduce import duties on automobiles, it should have been across the board, not the discriminatory application which has been seen. Simply, the import duty reduction for automobiles has not gone far enough:, he said.
On his part, the National Coordinator, Save Nigeria Freight Forwarders Importers and Exporters Coalition (SNFFIEC); Chief Osita Chukwu also condemned the fact that the slash on import duty does not apply to used vehicles, he alleged that government does not think of the poor when making policies.
He said: “we are kicking against it because whatever is good for the goose is equally good for the gander, government buys vehicles and give it to Managing Directors, Director Generals, and all these MDAs, then don’t you think you can make palliative measure for the poor”.