6 November 2012

Nigeria: 'Govt Lost N50 Billion to Waivers This Year'

The Federal Government lost at least N50 billion in import duty waivers granted to powerful government cronies this year, a Senate committee heard in Abuja yesterday.

Senator Isa Galaudu made the revelation during a hearing by the Senate Committee on Finance. In reaction to Galaudu's comments, Finance Minister Ngozi Okonjo-Iweala said the amount "was not lost by the Customs Service; it was lost by the federation."

But no details were given by Galaudu or the minister on which companies got the waivers and for what import items.

Duty is a tax levied on imports by the customs authorities to generate revenue and to protect domestic industries from more efficient or predatory competitors from abroad.

The Federal Government has been waiving such duties to well-connected businessmen and political loyalists, thereby leading to loss of billions in revenue that could have accrued to public coffers.

Daily Trust exclusively reported in November last year that the government granted rice and palm oil import waivers amounting to N150 billion in 2011 to 10 companies, with one of them securing the write offs 164 times.

Yesterday's Senate Finance committee hearing was held to debate two bills, one to repeal the Customs and Excise Management Act (2004) and enact the Nigeria Customs Service Act, and the other to amend the Companies Income Tax Act 2004.

Speaking at the event, committee chairman Ahmed Makarfi said the President must be stripped of arbitrary powers to grant import waivers.

He said lawmakers would make changes to the laws such that a National Assembly resolution would be required before any import duty waiver is granted.

Mrs Okonjo-Iweala had earlier said she feared that the new Customs bill would vitiate the president's powers on customs and excise duties.

But Makarfi said, "The National Assembly has problems with some of the powers you have said should be exercised by the president, particularly on waivers.

"The general view in the National Assembly is that such power must not be exercised by any individual except if the legislature, by some legislation or resolution, takes a decision about it."

Okonjo-Iweala said the Customs bill vested too many powers in the Customs service at the expense of the president and the minister, thereby making it inimical to the economic goals of the government.

"We do not consider this a good bill at the moment, in terms of the economic development of the country and we think that it would need significant amendment of some sections," she said.

"With the present bill, the policy making and executing powers are all vested largely in the Customs and are not separate. We believe that the bill should separate policy making powers from the executing powers, so that they can be properly aligned."

She added that in the bill, the minister's powers to appoint members of the Customs board were limited to a few persons while large powers of appointing the members were vested in the service.

"You can't have an organisation having the large powers to appoint members to its own board, to supervise itself. You have to separate these issues," the minister said.

Comptroller-General of Customs Abdullahi Dikko Inde, represented by Deputy Comptroller-General John Atte, said a new customs law is needed to promote smooth flow of trade "by reducing transaction costs and impediments at the interface between government and international businesses."

Declaring the hearing open earlier, Senate President David Mark, represented by Senate Leader Victor Ndoma-Egba, said the efforts towards repealing the Customs Act 2004 was aimed at establishing the administration and management of the service in line with the global best practices.

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