Customs: Import Levy And Burden Of Trust

When the directive of the Federal Government to the Nigeria Customs Service (NCS) to collect 35 per cent as duty and 35 per cent as levy for imported used cars and buses was announced last year with a circular which explained that the new increases in duty are in line with the Federal Government’s new automotive policy of revamping the automotive industry to encourage local production of vehicles, enhance entrepreneurial inclusiveness and generating employment for Nigerians, the big car dealers see the policy as a good initiative to resuscitate the local automobile industry,  while private individuals continue to express fear that prices of imported vehicles may soar.

The expectation of the people is that once the implementation of the new tariff regime from 35% to 70 % begins, it is pertinent that the government first implements the policy of local production of vehicles and determine its effectiveness before the new tariff policy can be implemented.

It is instructive that since the new policy was announced, the cost of clearing used cars and buses at the ports have increased by 300 per cent. This has led to the prices of used cars and buses going up by 250 per cent and the total number of vehicles discharged from Lagos ports have dropped to 8,000 units in January 2015, from 27,000 units in 2014.

This 63 per cent decrease is an indication that Nigeria’s auto policy has begun to take its toll on imported cars and invariably, the auto market.

Another cause for worry about the new auto policy is the recent findings that have revealed that only 20 per cent of the 35per cent levy collected from these vehicles actually gets to the federation account. The question now is where is the accumulated 15 per cent in over one year?

The General Manager Ports Terminal Multi-services Limited (PTML), Mr. Babatunde Keshinro while speaking with journalists at the just concluded one day workshop organized by the Association of Igbo Maritime Practitioners of Nigeria (AIMPN), stated that “The auto policy levy is a government directive and one cannot kick against it as the directive says one should pay duty and levy, it makes business difficult at the ports, people are complaining but it’s what government has directed, we will like to see the new government remove it but it has not been removed, so we must continue to comply.”

The Deputy President National Council of Managing Directors of Licensed Agents (NCMDLCA), Comrade Ben Ndee stressed that “it is 35 per cent levy we pay and it will be strange that there is a substantiated report that customs only remits 20 percent to the federation account, when we actually pay 35% levy and 35% duty, so why will Customs not remit to the federal government?

“I don’t think it is true but if that is the position, then government needs to properly investigate but I still doubt it because if you go to the port, agents will give you documents to prove the 35% levy they pay unless it is about customs commission on collection which government has approved for customs over the years.

“I know customs is not under government subvention for quite sometime now. They have been collecting some percentage from government with which they pay staff and carry out other capital projects they have been embarking on. For duty collection, we have been paying 35% duty and 35% levy on both used cars and new ones since last year,” he said.

“On the National Automotive Council (NAC) levy collection, according to him, “It depends on who you meet because the management may be up there giving instructions but the enforcement is a different ball game with the officers you have in the field.

“You don’t expect the Controller to be in all the terminals, so we are at the mercy of some of these officers that conduct some of these examinations, they tell you what they want to tell you and you end up arguing from now till eternity and in the end, you are either arm-twisted to do the needful without which, you and your consignment are there for as long as possible.

“Their interpretation of new cars from 2013 to 2015 is something that makes you wonder if we have laws in this country,” he added.

Finding out the claim from the Customs, the Public Relations Officer (PRO) of the Nigeria Customs Service, PTML command, Steve Okonmah said that there was a document to back up the collection from the customs headquarters.

He said, “If it is from an agent that person is not a real agent because we don’t see the money and I have a circular here dated last year January 1^ST, that directed the collection, stating that with effect from January 2014 all used vehicles should pay 35% duty but if is less than 3,000 kilometers it is assumed to be a new vehicle and all new vehicles must pay 35% duty and 35%levy which is equivalent to what Obama is doing in the USA.

According to him, “This encourages rich people to pay higher tax while not so rich people pay lesser, it’s the same thing our government is trying to do here but some agents feel bad about it, it is even the agents that are fighting on behalf of the importers and I don’t understand that, if for instance, an importer can afford 2014 or 2015 vehicle worth between N15million to N30million, why can’t he afford the levy? Then someone is here crying for them instead of being patriotic that more money should enter his country, he is crying because he didn’t see where to steal money from.

“We don’t work with rumors, since last year January we have been collecting 35%, so who takes the remaining 15%? If there is a report please can I see it and who wrote it and if it is a stake holder I  don’t think a stake holder is competent to discuss that, ask the agents where they pay duty to whether its Customs’ Account or Federal Government Account and the Federation Account is one regardless of where you are paying it from and it goes straight to CBN, so I don’t know if whether after payment Customs will go and collect it from the bank to remove 15% and give 20%to the government.  I am really surprised to hear this because if really there is such a report then that report is mischievous we don’t work with paper reports we work with circulars, and no circular has directed us to start collecting 20%, if it is going to be done good and fine but for now, there is no circular to that effect,” Okonmah stated.

However, going by the 15% allegedly pocketed by NCS, the customs would have been rich by N4.334 billion since the collection commenced in January, 2014 up till now in Lagos port alone and this is due to the drop in importation of cars into the country.

Using these indices, 43% of the total collection has gone into the coffers of the Nigeria Customs Service while the automobile industry is languishing and begging for attention.