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EDITORIAL

Another Look At Duty On Imported Vehicles

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The comptroller-general of Nigeria Customs Service (NCS), Col Hameed Ali (rtd.) recently raised concerns on the implications of high levy on imported vehicles in Nigeria which, according to him, has been counter-productive for the country. He appealed to the federal government to reduce the 35 per cent levy on imported vehicles just as he argued that it was imperative in order to check the rising cases of smuggled vehicles into the country. Currently, any new vehicle imported into the country attracts an import duty of 35 per cent and an additional levy of 35 per cent. This brings the total duty payable on such a vehicle to about 70 per cent.

Before the policy was put in place, import duty on vehicles coming into Nigeria was 10 per cent, with an additional 10 per cent surcharge effectively making it 20 per cent. The tariff-hike policy has not done the nation’s economy any good but has rather opened door to high level smuggling of vehicles into the country through the land borders as importers are now diverting cargoes to neighbouring countries to avoid high tariff. For instance, in Benin, duty on imported vehicles is 10 per cent and additional 10 per cent surcharges, which make it 20 per cent in total compared to 70 per cent Nigeria charges.

This newspaper is of the opinion that the government ought to review downwards the high tariff on imported vehicle because it has led to the country losing huge revenue. The high duty is what is driving most importers to other ports outside Nigeria. It must be realised that most of the vehicles being imported into those countries have Nigeria as their final destination. The development has led to increase in the rate of smuggling into this country.

Similarly, smuggling activities into Nigeria have led to the untimely death of innocent citizens as a result of stray bullets hitting them when the smugglers engage customs officials in gun battle at the border post.

Even more worrisome, in our view, is the lull in business since the government introduced 70 per cent duty rate on imported vehicles. We believe it would be a win-win situation if the government decides to make the tariff attractive as this will discourage smuggling and also facilitate an enhanced revenue.

It is instructive to recall what happened in Ghana when the government there reduced the duty rate.  On new vehicles and made the duty on old vehicles higher in order to discourage importation of old vehicles. But here, the federal government is saying it wants to encourage local manufacturers of vehicles even when there are no manufacturers in place to meet the number of vehicles required.

While reviewing the import duty policy, the government should vigorously encourage local manufacturers by patronising locally assembled vehicles. Vehicle purchase finance facility at single digit interest rate should be put in place to boost demand for automobiles. Age limit of used vehicles should be reduced gradually over time to lessen road safety risks.

The idea of the automotive policy was good on paper but it was hastily implemented. We urge the government to reverse the policy because it is not doing the nation’s economy any good, which is why the port in Lagos are filled with old and dilapidated vehicles because people want to avoid payment of high duties. The dented vehicles attract lower tariff.

Import duty on vehicles in Nigeria is 30 percent, while Cotonou charges 10 per cent. So, who will bring new cars into Nigeria and pay 70 per cent when they can pay 10 per cent in Cotonou and then smuggle it in through Seme border? Buyers of cars pay N700,000 here on a vehicle of N1 million, when the same car is available for N100,000 in Cotonou. On a N10 million vehicle, one is paying N7 million duty in Nigeria whereas in Cotonou, one pays N1million only. Presently more than 80 per cent of the vehicles imported into Nigeria are smuggled in and are not imported into the ports because people want to avoid the high import duty. We urge the government to take tariff back to pre-2013, which is 10 per cent import duty on imported vehicles and additional 10 per cent surcharge.


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