The Manufacturers Association of Nigeria (MAN) has commended the Federal Government’s announcement of a 7.5 per cent Value Added Tax (VAT) waiver on Automotive Gas Oil (AGO), commonly called diesel.
Director General of MAN, Mr. Segun Ajayi-Kadir, on Monday, in Lagos, via a statement, described the development as a positive outcome for the real sector.
The News Agency of Nigeria (NAN) reports that President Bola Tinubu during his Independence Day broadcast on Oct. 1 announced several reforms to reinvigorate the Nigerian economy.
To make the economy more robust and impact citizens’ standards of living, Tinubu promised the deployment of Compressed Natural Gas (CNG) buses and increased investments in Micro, Small and Medium Enterprises (MSME).
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He said provisional cash transfer to 15 million households, food relief packages, and the 7.5 per cent AGO tax waiver, amongst other measures would be provided to Nigerians.
The MAN DG noted that the tax waiver had formed part of the reconciliation that the association and other members of the Organised Private Sector of Nigeria had sought.
According to him, they had earlier called on the government and the Labour unions to use their best endeavours to find common grounds to avoid plunging the economy into crisis.
“We already have enough challenges and the manufacturing sector, in particular, is operating on the brink of a recession.
“You would also recall that MAN had stridently advocated for the removal of the VAT on diesel, especially because it has actually become a major “input” into our production process.
“We rely on diesel to power our machines and meet our energy needs in the face of abysmal power supply from the national grid.
“You are also aware that the price has gone above N1,000 per litre. Meanwhile, it is said that diesel is used to fuel about 90 per cent of the haulage trucks that transport petrol from the depots to retail outlets nationwide.
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“So, removing the VAT will help reduce the cost as a production input and cost of transportation for logistics and movement of people generally. It should bring relief to workers and the economy,” he said.
Ajayi-Kadir, however, expressed concerns over the six-month time frame scheduled for the tax waiver, querying if there would likely be a more permanent and impactful remedy to the problem.
He also emphasised the need to have an expansion of the joint committee to be set up to include stakeholders in the economic landscape.
“We also hope that government and labour will, this time, adhere to the terms of the agreement so that we do not have to come close to the edge before we find solutions.
“The anxieties and apprehensions are inimical to business and disrupt production plans.
“We look forward to a successful deliberation of the labour unions today and a definite call-off of the planned nationwide strike,” he said.