Anxiety trails planned hike in vehicle import tariff

As with some policies of government in recent years, the planned 70 per cent increase in tariff on imported vehicles has been some anxiety among prospective buyers. OLUFEMI ADEOSUN examines how best to implement the new auto-policy without hurting the economy and by implication, worsening the poverty situation in the country.

The unveiling of the new National Automotive Policy by the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, sometime in October, was greeted with applause by the Nigerian populace. It was rightly so, because like every policy of government, it was laced with well articulated projection about promoting investments in affordable made-in-Nigeria vehicles that will in future minimize the importation of vehicles.

Articulating the policy, Aganga had said, “An automotive industry will create significant good quality employment and a wide range of technologically advanced manufacturing opportunities. This industrial base can then form the foundation for other modern advanced manufacturing activities. For example, commercial vehicle production will lead to the manufacture of agricultural, mining and railway equipment, military hardware and transport.”

However, while still basking in the euphoria of the expected gains of the policy, the recent announcement by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, suggesting that come January 2014, potential car owners would have to grapple with a 70 per cent additional tariffs burden, a short-term downside, not envisaged a few months back.

Prior to the announcement, the duty on fully built units of passenger cars was between 20 and 35 per cent, with that of commercial vehicles standing at 10 per cent. Now with the duty on passenger cars jacked up to 70 per cent and commercial at 30 per cent, using 35 per cent as the basis of assessment, the Federal Government may have increased tariffs on passenger cars by 100 per cent.

Apart from the wave of criticisms from ordinary Nigerians who view the planned increment as a grand design to completely emasculate the masses, those seriously opposed to the move are the auto dealers, particularly those dealing in used cars, popularly known as “Tokunbo”. According to them, they are the prime targets which government is hell bent to price out of business.

Reacting to the new tariff, the President, Nigeria Labour Congress, Comrade Abdulwahed Omar, accused the Federal Government of insensibility to the plight of the Nigerian people, stressing that it was callous of government to come up with such increment barely two months that the policy was initiated without providing viable alternative.

Omar, who spoke at a forum in Kaduna specifically, took a swipe at Okonjo-Iweala, the minister who announced the increment, describing her as an imperialist agent, who is implementing IMF and World Bank economic agenda in the country.

According him, raising tariffs without providing an alternative would merely expose and put Nigerian people at the mercies of unscrupulous cars dealers who would exploit the situation to create artificial scarcity with its attendant effects on transportation.

He had said, “It is lamentable that the Federal Government has again come up with a programme that has the tendency to inflict pains on the working people in Nigeria. We were told that Coordinating Minister for the Economy and Minister of Finance has announced a new tariff regime that raises the charges on imported vehicles by 70 per cent.

“While NLC is not opposed to new policy, we hold that coming up with a new tariff barely few weeks to its implementation without viable alternative is not proper. In the least, it would just leave Nigerian people under the grips of some unscrupulous dealers who would lash on the new tariff to create artificial scarcity.”

Also commenting, an Abuja based auto dealer, Musa Ibrahim, said that the increment confirmed the aggregate opinion of the people that the present administration does not give a damn about the ordinary people.

He explained that government could come up with the auto-policy without provision of infrastructure to cushion the effects because the interest of those at the corridors of powers would not be affected, claiming that they had the needed financial muscles to pay any amount as import duty. “The primary objective of government is to see to the welfare of the people. While that tenet is being upheld by governments of other nations, it is not so in Nigeria.

At best, what we see at play from successive government is crash insensitivity to the plight of the people. “While the new policy may have been formulated with the good intention of rejuvenating the country’s automotive sector, government is putting the cart before the horse in its implementation.

For, how best do you describe the action of government that plans 70 per cent increase in tariffs on imported vehicles comes January 2014 without any single car assembly plant in the country? How would government deal with the attendant effects on transportation system because the there is likelihood of demands outweighing supply? Until all these posers are addressed, the policy can be best described as anti-people.

Reacting to a meeting between the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga and automobile importers/representatives of Equipment Manufacturers (QEMs) in which the former announced that an agreement had been reached on the implementation of the policy, the auto dealer noted that there was no difference between six and half a dozen.

According to him, the big time importers and the QEMs belong to the same elitist class that stand to benefit from the policy at the expense of the ordinary Nigerians. In the same token, another auto dealer at Central Area Abuja, Mr. Ben Chukwu, accused government of insincerity, insisting that it would have considered how to sustain the existing automotive policy rather than implementing a new one which seeks to discourage importation of cars.

Chukwu, who said that the new automotive policy when implemented would definitely lead to an increase in the cost of auto cars, however called on government to put adequate measures in place to sustain the Tokunbo auto sellers. “Government is just being insincere; do they want to compare those of us selling “Tokunbo cars” with Cosharis, Toyota, Mandillas and the likes of them? If they increase the tax rate on the importation of cars, of course it will lead to increase in prices.

“The kind of car I sell for N1million now will have to go for about N1.5million or more because I will have to pay the increased tax and will also want to make profit out of my transactions. But if the government wants to really address the naughty issues in the sector, they should do something about the auto industry in the country first rather than banning and increasing tax rates on Tokunbo cars,” he said.

Also commenting, Mr. Tony Maduaka, a civil servant lamented that the increase in tariffs had truncated his plans of buying a car before the middle of next year. He stated that he had been involved in contribution in the office in the last 6 months with the intention to use the money to order for a Toyota Camry, 1999 model comes early next year.

According to him, his contact abroad from whom he intended to make the purchase had told him that if government goes ahead to implement the 70 per cent increase in tariffs, he might have to pay double the amount of N900,000 thousands initially charged.

Lamenting, he stated, “This is my 14th years in the service and due to some other commitments, coupled with the meagre monthly stipend, I have not been able to procure a car despite the long distance I have had to cover from my home to the office each day. Now my hope of getting one for myself is being marred due to the recently announced hike in tariffs. Another intending buyer, Mrs. Josephine Olaolu, challenged government for initiating policy that it could not subscribe to.

She sought to know how many government officials patronise made-in-Nigeria goods in which the country has competitive edge, not to talk about vehicles manufacturing in which it lacks basic expertise. Olaolu, who accused those in government of hypocrisy, stated that people have had to constantly doubt the sincerity of government because it preaches one thing and does the other.

Citing the issue of the two armoured cars purchased by the Minister of Aviation, Princess Stella Oduah as a case in point, she derisively asked if such cars would also be produced locally or government would, as usual, ask for a waiver, which ordinary Nigerians could not enjoy.

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