Nigeria: OPS Writes Buhari, Demands Tax Holiday, 7 Other Palliatives for Private Sector

24 March 2020

The Organised Private Sector (OPS) has written to President Muhammadu Buhari over the coronavirus, COVID19, pandemic, demanding for a tax holiday for the private sector among other seven palliative measures to rescue the sector from the consequences of COVID pandemic.

In a letter dated March 24, 2020, by the Director-General of Nigeria Employers' Consultative Association (NECA), Dr. Timothy Olawale, titled "Specific economic palliatives for the private sector in view of COVID- 19 pandemic", warned that "the implications of the pandemic on businesses could lead to the closure of companies, massive job loss and loss of revenue to government through payment of taxes, increase in social vices and increased insecurity, among others, leading to further economic crisis."

The letter read in part: "We commend the Federal Government and the Central Bank of Nigeria (CBN) for the on-going efforts at containing the Coronavirus. In particular, we note the various interventions and palliatives through the Central Bank of Nigeria (CBN) aimed at ensuring business continuity. We also commend steps taken by your Administration to further curtail the spread of the virus, to wit: the closure of Educational Institutions and Airports to prevent further spread of the virus in Nigeria. While we note the efforts made thus far, we wish to state that the implications of the pandemic on businesses could lead to the closure of companies, massive job loss and loss of revenue to government through payment of taxes, increase in social vices and increased insecurity, among others, leading to further economic crisis.

"In light of the foregoing, we call on your Excellency to take more specific steps in providing palliatives and support to organized businesses. The specific support, would among others, include:

A Temporary Scheme for paying Compensation to companies in the risk of laying off in order to retain jobs. This is to aid the continued existence of companies and prevent layoffs within private companies facing financial pressures as a result of Coronavirus. Under the scheme, which could last for the next three months, The government will cover 60% of the salaries of employees paid on a monthly basis, who would otherwise have been fired, with companies paying the remaining amount.

Support from Government to negotiate and reschedule bank loans, to aid in boosting businesses and also afford adequate time for payment, especially loans taken by companies within the past three (3) months.

Suspension of payments of taxes and levies: The Coronavirus pandemic has affected businesses circles and activities. The Real sector is facing the risk of total shut down, as there are no imports and exports, sales are down and production at almost zero levels. At the same time workers are expected to be paid and other commitments honoured by the businesses.

Tax-free cash flow boost for employers: A stimulus package to help pay wages or for investment to protect against downturn inactivity. The payment should be open to businesses with a turnover of less than N50 million.

The government should allow for tax payment deferrals more flexible for a period of six months, upon request, with a discount on interest rates.

Special the focus should be given to sectors that are worst hit: Aviation, Hospitality, Manufacturing, Retails, Tourism, Food and Beverage, etc. The government could collaborate with NECA as the representative body of organized business to implement stimulus packages that are sector-specific.

To encourage disclosure and contain the spread of the virus, the Government should institute payment support for employees both in the Public and Private sector who are self-isolating and for those diagnosed with the virus, the payment will be made for the duration of illness. This will encourage those that have contacted the disease to voluntarily report.

Greater support to the Real sector as continued production would ensure constant provisioning to meet social needs, to avoid panic buying and the risk of dangerous overcrowding of shops, which will require proactive commitment from the entire manufacturing supply chain.

Nigeria is not in isolation. These measures and a host of others are being implemented world over by Governments to ensure the continued survival of private businesses in their climes. Governments in other climes have taken specific measures to protect local industries and guarantee job security for their citizens. This could be replicated in Nigeria. A few examples will be provided to buttress our position:

In Australia, The government provided tax-free cashflow for employers. Up to $25,000 is available to help pay wages or for investment to protect against downturn inactivity. This is excluding wage subsidy and instant asset write-off for businesses with a turnover of less than $500million.

In China, SMEs were exempted from payment of Pension contributions, unemployment and work injury insurances, while same had been halved for large companies from February to April 2020 and also an extension on the tax reporting period; import goods and materials were exempted from import tax, amongst other palliatives.

The Cook Island provided an Economic Stabilization fund consisting of NZ56 million to support business continuity. It included the provision of wage subsidy at the minimum rate for up to 3 months.

In Denmark, the Government is providing Pay Compensation Scheme to companies with the risk of laying off in order to retain jobs. Under the scheme, which will last for three months, the state will cover 75% of the salaries of employees paid on a monthly basis who would otherwise have been fired, with companies paying the remaining amount. For hourly workers covered by the agreement, the government will cover 90% of their wages, up to 26,000 Danish kroner (£3,162) per month.

In France, the Government had proposed that water, gas and electricity bills, as well as rents, will be suspended for companies in a difficult situation. Fixed costs will also be reduced by the saving of rents, especially for businesses that have to close.

To encourage disclosure and contain the spread of the Virus, the Ireland Government instituted a payment of €305 per week for 2 weeks for those self-isolating and for those diagnosed with the virus, the payment will be made for the duration of illness. This is separate from the payment of €203 per week for six weeks (COVID-19 pandemic unemployment payment) available for affected workers (including self-employed) who have been impacted but not ill or self-isolating.

The Italian Government, amongst others, initiated the suspension of payments of taxes and social security contributions.

The Japanese The government pays 8,330 yen per day for each worker who misses work, while self-employed people, as well as freelance workers who meet certain conditions, will receive a uniform 4,100 yen per day. The same story applies to Maldives, New Zealand, North Macedonia, Philippines, South Africa, Singapore, Spain, Switzerland, and many other countries

While we affirm our commitment and support towards the eradication of the Corona Virus and resurgence of our economy, we earnestly look forward to the support of the Federal Government at this critical period in the nation.."

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