LAGOS – Three industry experts on Friday urged the Federal Government not impose tax on industries if the sector must shore up the anticipated shortfall from oil revenue.
They told the News Agency of Nigeria (NAN) in Lagos that the hinging of more revenue on tax and others measures due to low oil prices would further retard business growth.
They said that taxes and other austerity measures put in place would weaken the purchasing power of the masses even if the masses were not directly taxed.
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, said that the benchmark of the budget was a risky optimism.
Yusuf said that the funding of the 2015 budget on 65 dollars per barrel was unrealistic because of the forces of demand and supply in the international market.
“The 65 dollars per barrel oil benchmark is on the optimistic side, given the developments in the global oil market.
“At times like this, it is better to be conservative in revenue expectations,’’ Yusuf said.
He noted that the benchmark would further compound the woes of entrepreneurs, who had been struggling to grow their businesses in spite of the various challenges confronting entrepreneurs.
“Businesses are seriously burdened by the recent depreciation and devaluation of the naira.
“High import duty, high cost of funds and the impact of poor infrastructure are adversely affecting the growth of businesses.
“The government should not impose additional pressure on businesses in its quest for an increase in non-oil revenue,’’ Yusuf said.
The Secretary-General, Nigerian Association of Small and Medium Enterprises, Mr Eke Ubiji, appealed to the Federal Government to prop-up the non-oil sector instead of increasing taxation to augment government revenue.
Ubiji said the government should encourage an aggressive development of the non-oil sector.
“Our reliance on crude oil is not sustainable because the government will not be buoyant enough to invest in infrastructure in the face of a reduction in global demand for oil.
“Government will not be able to meet up with its recurrent expenditures like payment of salaries to staff and even contractors.
“Exchange rate is currently high and its effect on businesses is unquantifiable.
“There should be greater emphasis on cost savings and efficiency of tax administration rather than the imposition of new taxes or charges on businesses,’’ Ubiji said.
A former CBN Director of Budget and Planning, Mr Titus Okunronmu, said that the benchmark would create a deficit in government revenue, and in turn increase inflation.
Okunronmu said that the global oil price, which had dwindled since first quarter of 2014, might reduce to as low as 55 dollar per barrel by mid 2015.
He added that the U.S., which was Nigeria’s biggest market for crude oil with about 40 per cent purchase, had stopped patronising the nation.
“This will reduce the level of income that would have accrued from the proceeds.
“Our over-dependence on oil as a means of foreign exchange is detrimental to the growth of our economy.
“Benchmarking the budget on 65 dollar per barrel will create a huge deficit in government revenue which will in turn reduce infrastructural development.
“We need to proffer means of diversifying the economy from a mono-product nature to a multi-product one,’’ Okunronmu said. (NAN)