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SDL: How FG Will Rake N120bn Annually



There are indications that the country would raise over N120bn yearly through sustainable development levy, Chika Okeke writes…

As federal government seeks additional sources of Internally Generated Revenue (IGR), there is indication that the country would raise over N120bn annually with the introduction of sustainable development levy on cement production and importation.

This is even as the proceeds generated from sustainable development levy would be channelled into housing development as was done in the education sector with the introduction of education tax fund.

Checks by LEADERSHIP Newspaper revealed that about 40 million tonnes of cement is utilised for building and other construction purposes in Nigeria annually.

With the introduction of at least N3000 per ton of cement, the levy would likely crash the mind boggling 17 million housing deficit by providing over 20, 000 housing units annually if adequately utilised.

It was further discovered that the levy if passed into law may serve as collateral that would attract direct foreign investment in the country.

Already, there are moves by experts to inculcate the levy into the National Housing Fund (NHF) currently scrutinised by the National Assembly.

The Executive Partner, NORD Consult, Engr. Mohammed Nur Khalil had at a public hearing organised by House of Representatives Committee on Housing, sought the introduction of sustainable development levy on cement production.

The Bill sponsored by Hon Ahmed Baba Kaita was for a motion on the need to ensure full compliance with the National Housing Fund (NHF) Act for effective housing delivery in Nigeria (HR. 59/2017).

Khalil recalled that during late Gen Sani Abacha’s regime that the Education Tax Fund (ETF) was introduced despite outcry from the publics and companies who wondered why their profit should be taxed.

According to him, “By now, we all know that the only saving grace for the tertiary education in Nigeria is the education tax fund”.

He noted that the proposed development levy on cement would be used for the development of housing sector just as education tax fund is currently used to boost tertiary education in Nigeria.

“We are recommending the introduction of a clause immediately after clause 6 in the provision that has been made; the clause 6 should be for sustainable development levy and we are recommending that it should be paid and credited into the fund established under section 3f (of National Housing Fund Act)”.

He pointed out that the levy should be pegged at N2000 per ton of cement or N100 per bag of 50kg cement.

Elaborating on how the levy should be captured in NHF act, he added, “In clause 2, notwithstanding the provisions of sub section one of this section, the president may by nexum order, vary, delete, add, amend or substitute consumer goods, services or products and approve rate for the levy as at when he may deem fit in the circumstance”.

“The levy will only be on cement among the products consumed in the construction industry; maybe when this becomes very useful, the president may decide to include other products that are used in the construction industry”.

Khalil envisaged that the levy would raise additional N100bn or N150bn revenue for the government adding that the present consumption in the country is 40 million tons annually.

“If the N100bn accrues to the NHF and Federal Mortgage Bank of Nigeria (FMBN) decides to use it as a collateral or guarantee for investors to come in, we will be able to attract at least N365bn which we will be able to provide 15, 000 houses on the average every year sustainably”.

He further recommended that the Federal Inland Revenue Service (FIRS) should collect the sustainable development levy as well as the insertion of a clause immediately after clause 11 as Clause 11a which would be the duty of FIRS to collect sustainable development levy.

“Sub clause 1: the FIRS herein after referred to as a service shall access and collect from manufacturer in companies and importers the levy imposed under section 6a1 of this act”.

“Sub section 2: the service shall pay the levy collected to the bank and shall when doing so, submit to the bank in an approved return form showing: (i) the name of the company or importer making the payment; (ii) the amount collected and (iii) the accessible turnover of the company or importer for the accounting period and any other information as may be required by the bank for proper administration of the levy”.

Explaining further, Khalil added, “In sub section 3: the levy shall be due and payable within 60 days after the Service has served notice to assessment on the company or importer in such form as the service may from time to time determine”.

“Sub section 4: where a levy is not paid within the term specified in that section, the service shall serve on the company or importer a demand note for the unpaid levy plus a sum which is equal two per cent of the levy”.

“5, any company or importer that fails within two months after the demand note to pay the levy imposed commits an offence and is liable or conviction of not less than N100m and the Chief Executive Officer, director or every other person who was purported to have acted in that capacity of the company or importer shall be liable to be prosecuted and punished for the offence in like manner as himself committed the offence unless he proves that the act or omission constituting the offence took place without his knowledge,  consent or connivance”.

“6, a person guilty of an offence under sub clause 5 of this clause shall be liable on conviction to a fine of N10m or imprisonment for a term of 3 years or to both such fine and imprisonment”.

“7, the institution or procedure or imposition of anything under this act shall not relieve a company or importer from liability to pay the Service such levy that may be due under this act”.

He noted that one of the major reasons the Central Bank of Nigeria (CBN), commercial and merchant banks failed to remit to the NHF was due to the absence of offences and penalties in the NHF act.

To this end, Khalil proposed that a clause should be inserted immediately after clause 21 as clause 21a with the title, “offence and penalty for the failure of a body, corporate to collect or pay contributions”.

In his submission, he reeled out how the penalty should be captured as, “(1) a body, corporate that contravenes or fails to comply with provisions of this bill is guilty of an offence under this bill”.

“(2) where an offence under this bill is committed by a body, corporate, every chief executive officer direct or every person who was purporting to act in that capacity is severally guilty of that offence and shall be liable to be prosecuted against and punished for the offence in like manner as if himself committed the offence unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance”.

“(3) a person guilty of an offence under clause 21 a shall be liable on conviction, in case of a body or corporate, a fine of N100m and (b) an individual to a fine of N10m or imprisonment for a term of three years or to both such fine and imprisonment”.

“The institution or proceedings for imposition of penalty under this bill shall not relieve a body, corporate from liability to pay which is all may become due under the bill”.

The executive partner further recommended that since the revenue collected from the NHF is not government revenue that FMBN should be exempted from or the NHF proceed should be exempted from the Treasury Single Account (TSA).

“We are proposing the insertion of clause 24a immediately after clause 24 with the title, “Exemption from the TSA”, funds accruing NHF from any contribution under this bill shall be exempted from being paid into TSA”, he concluded.

However, there are fears by stakeholders that this initiative when passed into law may likely lead to a hike in the price of cement.

Reacting, a staff of Nigerian Building and Raw Materials Research Institute (NBRRI) kicked against the levy which he described as a clear aspect that would likely lead to a hike in the cost of housing.

“NBRRI has been able to come up with alternatives to cement which can be derived from local source like pozalonos which you can generate from waste materials, agriculture resources and among others that can be deployed as alternative sources of cementetious properties that cement produces and which may bring the cost of building low’.

Also, Mr Abdulfatai Garba of Chicago Association of Realtors advised stakeholder to be cautious on the levy due to what he described as “the Nigerian factor”.

“It’s only in Nigeria that if the cost of dollar increases, the average woman in the market would increase the cost of tomatoes to $3000 instead of N1000”.

“We need to be very careful because we are trying to get money from the levy which is a laudable programme but at the same time, I hope it will not increase the price of cement”.

He sought for the restructuring of real estate sector in Nigeria in order to attract more foreign investors.

However, the Chairman, House Committee on Housing, Hon Ahmad Babba Kaita had assured that the committee would deliberate over the issue during the technical session.

“We seek your indulgence. We do it and when we feel it will be more portent and better, we invite other people to join the technical committee so that we can make sense of what we are doing here”.

“I am appealing to the technical know-how to come forward during the technical session and we will provide them the opportunity to participate though we will officially write the critical stakeholders that would be part of the technical session”

Also, a member of the committee, Hon Sani Abdu enjoined the ministry of power, works & housing to study the South African land bank adding that land bank would enable governments’ policy thrust to be achieved much easier and cheaper.

He was optimistic that if the sustainable development levy is properly captured that it would assist the government.