The Centre for the Promotion of Private Enterprise (CPPE) has warned that the imposition of 40 percent import duty on vehicles is a dangerous fiscal policy decision.
CPPE in a statement titled, comments on 2023 fiscal policy measures, and signed by its Chief Executive Officer, Dr. Muda Yusuf, said it is difficult to justify this high import duty on vehicles. It said Nigeria is about 90 percent dependent on road transportation which underscores the importance of motor vehicles in the economy.
According to the statement, “There is an increasing affordability problem for citizens with regard to vehicle acquisition, especially by the middle class of the Nigerian society. The cost of locally assembled vehicles are beyond the reach of most Nigerians, contrary to the assurance given by government at the inception of the auto policy.
“There is limited access to credit for vehicle purchase by Nigerians. Over 90 percent of purchases are done out of pocket, which is extremely challenging. And where the credit facilities exist, the interest rates are outrageous, between 25-30 percent. The economy has experienced huge exchange rate depreciation which had already exacerbated vehicle acquisition cost in the first place.”
It said that it is therefore insensitive of policy makers to impose a whooping 40 percent import duty on vehicles in an economy where there is no mass transit system and where vehicle ownership has become a necessity, especially for the middle class.
“Let us not forget that there is an additional 2% and 4% green tax, depending on the engine capacity of the vehicle. This translates to import duty of 42 percent or 44 percent depending on the engine capacity of the vehicle,” CPPE said.
On the implication on the economy and citizens, CPPE said it will bring about high transportation cost as vehicles costs increases, Risk of increased vehicle smuggling, especially in the light of porous borders, and the number of rickety vehicles, especially commercial buses will remain high as replacement cost becomes prohibitive.