- It’s better to reduce the charges on vehicles rather than lose revenues to our neighbours
Nigeria’s Customs Service (NCS) has, once again expressed concern over the high levy on imported vehicles. The duty on such vehicles stands at 35% while there is also a levy of 35%, making a total duty of 70%. But the Comptroller-General of Customs, Hameed Ali, voiced the concern of many Nigerians, including the major stakeholders in the industry, that this rate is too high and consequently counter-productive. He wants it reduced to something in the region of 35% duty and 10% levy, bringing both to 45%, down from the present 70%.
Ali made the disclosure at this year’s International Customs Day celebration in Abuja, with the theme: “SMART borders for seamless Trade, Travel and Transport.” According to the customs boss, “what I suggested which is something we have been suggesting, is on automotive duty. If you know how the duty has been shared; we have 35% duty, 35% levy. But if you import a brand new vehicle to Nigeria you pay 70% duty. From what we have done – analysis and statistics – I discovered that this duty has now driven most of our importers to our neighbouring ports.”
The implication of this is that the country is losing huge revenues to these neighbouring countries with more friendly import duties. Not only this, according to Ali, “also, it has increased the rate of smuggling into this country. Having interacted with our stakeholders, what we discovered is that the sudden increase in duty is what is driving them to other ports.”
With the do-or-die attitude of smugglers, particularly at the Idiroko and other borders, sometimes leading to loss of lives of innocent citizens when men of the customs and smugglers clash, we urge the government to listen to the voice of reason. The truth of the matter is that the idea for the introduction of the 35% levy, which was to encourage the local manufacture of automotives appears to have been defeated. More than 20 years after the policy took off; it has not taken the country anywhere. The dream of local manufacturing of vehicles, in spite of little gains here and there, has remained largely unfulfilled. The industry, like other sectors of the economy, is still bedevilled by many factors, including lack of local components as well as power supply, among other challenges. We need the political will to see the policy through; what successive governments have done is pay lip service to it. Perhaps the government can use the automotive fund to develop the local industry.
We also hope, as the customs boss promised, that the country will be able to take full advantage of the new equipment just procured by the service. “Our sea ports and airports will be covered by non-altruistic equipment. That will give us 100% examination of everything that comes into this country. Not only revenue will rise, it will also effectively secure this country against illicit importation,” he added. We pray this is not affected by the characteristic Nigerian factor, which has rendered such hopes in the past hopeless in several facets of our lives.
Indeed, we wonder why it has taken this long for this equipment to be procured, given the place of the customs service in any country’s affairs, whether in terms of revenue generation or in terms of ensuring that contraband do not find their way into the country.
With the call for a reduction of the duty becoming more and more strident daily, we urge the Federal Government to see reason and heed the customs boss’ call for a downward review. There is no doubt that the Federal Government meant well by introducing the high tariff to encourage local vehicle manufacturers, but then, the intended balance between vehicle supply and affordability with the production by the assembly plants envisaged has not made much progress.
Even the infrastructure to make the dream a reality is not there. The implications of all these are serious; not only are imported vehicles very expensive, the country is also losing huge revenues to neighbouring ports through which the vehicles are smuggled in.