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Police fund tax will hurt investment, experts warn


• Say FG planning to pour water into leaking basket
• Lawyers urge firms to challenge ‘obnoxious act’

Economic experts and investors have criticised the Nigeria Police Trust Fund, describing it as a disincentive to the country’s investment climate.The Nigeria Police Trust Fund (Establishment) Act, 2019 was signed into law June 24, 2019 and will be in force for a six-year period. The act will require corporate organisations to part with 0.005 per cent of their net profit to fund the training of personnel, procure equipment, and instructional materials for police colleges, and boost welfare.

An Abuja stockbroker who spoke anonymously yesterday said: “The tax is good for the purpose mentioned but it would be a disincentive to investors. Many would begin to shy away from stocks because they know their profits would be affected.

“Another implication is that it would lead to high cost of transaction and loss of appetite among investors because of the multiplicity of taxes such as the education levy and the recently raised VAT.” Development economist, Odilim Enwegbara, expressed concern that the police hierarchy or the persons in charge could misappropriate the fund.


“The police are not to be given a special financing from a tax like this because it has great negative implications for the investment climate in the country. Instead, the police must be funded from provisions in the federal budget and on personal basis like what some corporate bodies like the Dangote Group and others are doing, even providing them with cars. Others can take up the voluntary responsibility of building police stations and the like, but certainly not through this kind of taxation. We have multiple taxation and this is a serious disincentive for investment in the country,” Enwegbara said.

An economist at FSDH Merchant Bank Limited, Ayodele Akinwunmi, said: “Granted, the police need more funds to enable them to function. There are, however, other areas where the Federal Government can source money without over-levying existing tax compliant entities.”The Partner/Head of Tax and Corporate Advisory Services at PwC, Taiwo Oyedele, described the move as yet another addition to the myriads of taxes currently stifling growth in Nigeria.

“The issue is not just the amount companies have to pay; it is the fact that this extra burden will not solve the police funding problem. Education tax has not solved our education funding challenge. IT tax has not revolutionised technology in Nigeria. So, why does anyone think a police fund levy will be different?

Stressing that the tax will have cost implications for many businesses and consumers, Oyedele said: “Conventional wisdom suggests that if you find yourself in a hole, you should stop digging and if a basket can’t hold water because it’s leaking, you cannot solve the problem by increasing the intensity with which you pour water into it.”

Kunle Edu, publicity secretary of the Nigerian Bar Association (NBA), said he was not aware of any law mandating such payment.“Considering the myriads of taxes and levies paid by corporate bodies without commensurate benefits, this is one too many. The government should first do a proper enlightenment campaign and let Nigerians know the benefits of this new policy and a further assurance that the managers of the funds would involve civil society and professional associations like the NBA, NLC,” he said.

A Senior Advocate of Nigeria, Ferdinand Orbih, called for a “reversal” of the “obnoxious tax,” while Kano-based lawyer, Abubakar Sani, declared: “If I were to advise a company, I would counsel them to challenge it.”

Minister of Finance Zainab Ahmed and the Federal Inland Revenue Service (FIRS) did not provide further insight into the new tax regime when The Guardian inquired.The fund, meanwhile, will consist of grants and donations from government bodies and non-governmental organisations, even as the act exempts any income earned from investments by the fund and relieves the NPTF from any tax legislation applicable to companies or trust funds.


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