FG eyes more taxes, fewer incentives in 2023

FG eyes more taxes, fewer incentives in 2023
Minister of Finance, Zainab Ahmed

 

The Federal Government plans to introduce more sin taxes and cut down on tax incentives in 2023 through the proposed 2022 Finance Bill, media has learnt.

This was according to a copy of the public presentation of the 2023 proposed budget by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, released recently.

In the document, the minister disclosed that the sin taxes would be introduced to fund critical healthcare in the country.

The document read in part, “Finance Bill, 2022 will propose specific sin taxes to fund critical Healthcare Investments.”

According to Investopedia, a sin tax is levied on specific goods and services that are considered harmful or costly to society.

Such goods and services include tobacco products, alcohol, and gambling ventures.

Sin taxes are introduced to deter people from engaging in socially harmful activities and behavior while providing revenue to the government.

Earlier, the Federal Government, through the Budget Office of the Federation, had revealed that it would begin the implementation of its proposed excise duties on telecommunication services and beverages in 2023.

However, the Minister of Communications and Digital Economy, Prof Isa Pantami, kicked against the tax on telecommunication services, which led to its suspension.

Pantami maintained that he was against implementing this tax which would increase the cost of telecommunication services for Nigerians, discouraging them from using telecommunication services, which had become a necessity for many Nigerians.

Aside from introducing six taxes, the Federal Government plans to phase out tax incentives, such as the pioneer tax waiver.

The Federal Government hopes to “gradually transition away from expensive & redundant tax incentives.”

Media recently reported that the Federal Government gave tax reliefs and concessions valued at N16.76tn to large companies between 2019 and 2021.

As of the end of 2021, 46 companies had benefitted from various tax incentives and duty waiver schemes while the requests of 186 companies were still pending.

Reacting to this, the Managing Director/Chief Executive Officer of Cowry Asset Management Limited, Mr Johnson Chukwu, said that introducing new taxes and cutting down some tax incentives might negatively affect manufacturers and consumers in Nigeria.

He said, “We could see a situation where the manufacturers are unable to pass on those costs and absorb the costs, which will reduce their profitability and even the appetite for further investments. If they are able to pass those costs to consumers, this will be a difficult situation because of the existing weak purchasing power.”

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