President Lagos Chamber of Commerce and Industry Mrs Toki Mabogunje has asked the federal government to suspend the 50 per cent increase in VAT, give tax breaks to health care and pharmaceutical companies, airline, manufacturers, agro-processors, SMEs and hospitality players. Speaking at a press briefing she said “policymakers and the organised private sector need to come together to rescue the economy from collapse at this critical time. Recognising the role of business and investment in the economy, it is imperative to have an urgent rescue package that would enable businesses navigate the storms as well as preserve employments. We therefore propose the following support measures for the business community for consideration.
“Temporary suspension of 50 percent increase in VAT rate till year end, also, P.A.Y.E should be suspended for the next six months. This would help boost the purchasing power and aggregate demand, thereby stimulating the economy. Agro-processing companies should enjoy import waivers for the next one year. This is critical to support food security and agricultural supplies. Commercial banks are implored to offer reprieve to businesses and corporates indebted to them. The reprieve could be in form of loan moratorium and restructuring. We urge the CBN to review the cash reserve ratio downwards to 20 percent from the current 27.5 percent, to enable commercial banks have more liquidity to support businesses”.
Mabogunje said “Our propositions to the government are informed by the findings from our recently conducted survey on the impact of COVID 19 lockdown on businesses as well as interactions with major stakeholders in the private sector. Findings showed that demand has reduced significantly with revenue severely affected. Majority (83%) of business owners plan to cut down salaries, downsize workforce or a combination of both. Businesses therefore request adequate stimulus and intervention to preserve investments and save jobs. More than half (54%) of business owners want banks to reduce interest rate and give moratorium on loans, 29 percent want reduction in tax liabilities, while 17 percent want waivers on import duties and demurrages”.
Other measures recommended by the Chamber are Support towards augmenting insurance premiums which are dollar-denominated as cover were mostly underwritten abroad due to lack of local capacity, support to pay for operational cost including international lease rental on grounded aircraft and maintenance (C& D-checks) and full implementation of the Executive Order on Removal of VAT from Air Transportation.
Continuing she said “While we commend the government on the various measures already put in place to cushion the effect of this pandemic both on individuals and buisnesses, we are concerned that the current approaches used in implementing some of these measures would not yield the desired result. There is therefore a need for restrategising and ensuring proper coordination both at the states and federal level. We urge the government to focus on the completion of critical infrastructure projects nationwide such as the Lagos-Ibadan expressway, Lagos-Ibadan rail project, Enugu Airport, the Second Niger Bridge, East-West Road, among others. Also, there should be an upgrade of power and broadband infrastructure across the country in order to support ICT and digital economy.
“These public goods would have significant positive impact on commercial activities and businesses as they reduce cost of doing business and boost productivity. The private sector should be encouraged and incentivised to contribute to investment in infrastructural development. Finally, we strongly urge engagement of the private sector by regulatory institutions and agencies of government in addressing national economic issues so that intended benefits are achieved for the common good”.
