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Consumer Network raises concerns about multiple taxes in power sector

By Kingsley Jeremiah, Abuja
29 September 2021   |   3:56 am
The Nigeria Consumer Protection Network (NCPN) has insisted that the growing rate of multiple taxation in the nation's electricity industry is worrisome.

The Nigeria Consumer Protection Network (NCPN) has insisted that the growing rate of multiple taxation in the nation’s electricity industry is worrisome.

A legal practitioner and President of the group, Kunle Kola Olubiyo, stated that the level of taxes being imposed on the organised private sector spells doom for the country.

Olubiyo said the development is unacceptable in the face of demands of corporate social responsibilities, Value Added Tax, Company Income Tax, Withholding Tax, import duties and others.

He decried that the development is worsened by port inefficiencies, which lead to high clearance charges and demurrage, adding that security agencies with different checkpoints and tolls and other related charges, were frustrating projected goals in the sector.

NCPN’s outcry came amidst a new law, being proposed by the National Assembly as part of amendment to the Electric Power Sector Reform Act (EPSRA), which may compel electricity generation companies to fund host communities with five per cent of their revenue.

A development projected to further increase the cost of electricity in the country, the bill, sponsored by Hon. Babajimi Benson, representing Ikorodu Federal Constituency, provides for the reservation of five per cent of the revenues accruing from power generated from power generating companies for the development of host communities.

The Guardian had reported that the fund would add to the existing tax burden, which included corporate tax rate of 30 per cent, education tax of two per cent, police tax, land use charge and other levies at states and local governments.

A source at one of the power generation companies told The Guardian that the development might force the companies to declare force majeure.

Olubiyo said: “Be it power sector, manufacturing sector or any other productive sector, multiple taxation remains counter productive in nature, inimical to growth and development and a disincentive to trade and investment.”

Coupled with unnecessary bureaucratic bottleneck associated with the difficulty in accessing foreign exchange by those involved in productive ventures in the critical sectors of the Nigerian economy, Olubiyo stated that consumers may continue to face high inflation on goods and services.

Also decrying the inconsistencies in government fiscal policies, he said the development is impacting negatively on Ease of Doing Business and Nigerian Economy’s Global Competitive Indexes.
“At the end of it, the burden of all of these is usually transferred to the consumers and end users,” he added.