Monday, 3 July 2017

Tariff on imported vehicles: Osinbajo should fulfill APC's campaign promise

While addressing a town hall meeting of political stakeholders in Ondo State shortly before the 2015 general election, Professor Yemi Osinbajo, then Vice Presidential candidate of the All Progressives Congress (APC), assured Nigerians that General Muhammadu Buhari's government – if voted into office – would slash tariffs on imported vehicles.

Osinbajo made the promise in the face of a 350% hike in the Customs duties payable by Nigerians on imported new and fairly used vehicles by the PDP government.
"We do not agree that there should be high tariffs on imported cars whether new or old ones because Nigeria is not producing cars for now.


"What we will do first is to fix power and encourage local production of cars. But before then we will reduce the high tariffs that Nigerians are paying to import vehicles into the country," Osinbajo had told his audience.
About six months after assuming office, Osinbajo reiterated government's resolve to review the ill-advised hike in vehicle import tariffs.

Speaking in Abuja at the opening of the 17th Abuja International Motor Fair in October 2015, Osinbajo said government was not unaware of the challenges bedeviling the implementation of the National Automotive Industry Development Policy introduced two years earlier by the Goodluck Jonathan administration. The hike in Customs tariffs on imported vehicles from 20% to 70% was done under the guise of implementing the auto policy.

Osinbajo, who was represented at the event by then Acting Permanent Secretary, Ministry of Industry, Trade and Investment, Mohammed Badamasuyi, said, "Government is aware that low patronage is one of the challenges confronting the domestic automobile industry in Nigeria. In this regard, this administration will lead the campaign of buying made-in-Nigeria vehicles through public procurement to stimulate the industry."
He expressed concern over the high cost of importing vehicles into the country and its impact on the economy, adding that the administration was seeking ways of improving the auto policy to address the problem.
Government, Osinbajo said, would "seek new ways of improving the Automotive Industry Development Policy in order to protect the industry".

According to him, "The high cost of importing fully built vehicles and used cars into the country is having serious impact on the economy. This trend would be reversed as quickly as possible."
He also said the Federal Government would lead the purchase of made-in-Nigeria vehicles through public procurement.

The APC government at the centre is certainly not unaware that the inhuman hike in the import duty of vehicles has taken the prices of cars astronomically high and beyond the reach of ordinary Nigerians, consequently inflicting untold hardship on the people. It has also fuelled smuggling of cars through the nation's highly porous borders. Before the hike in duty, about 400,000 units of vehicles were handled annually at Nigerian seaports. This has dropped to about 95,000 units per annum while a large chunk is landed at the Ports of Cotonou from where they are smuggled into Nigeria, thereby shortchanging the Nigerian government and private businesses at the port of much needed revenue. This has resulted in the reduction of workforce by some terminal operators and lower duty collection by the Nigeria Customs Service.

While the idea behind the National Automotive Industry Development Policy is noble, the hasty increase in imported vehicles tariffs is ill-advised. Nigerians want to see affordable and functional made in Nigeria vehicles before the government places a technical ban on the importation of used or new ones. As it stands, the policy benefits only a few shylock auto dealers who benefit from a very low duty rate in the guise of importing semi-knocked down vehicles purportedly to assemble in Nigeria and sell at ridiculously high prices to hapless Nigerians. The resultant effect is that the prices of vehicles jumped by 60% in 18 months.

The Buhari administration should therefore make haste to fulfil its campaign promise of returning the duty on imported vehicles to 20%.

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