How Reduction Of Levy On Imported Cars Will Affect Nigerians

Exciting news for Nigerians, as the Federal Government concluded plans to slash the levy to be paid on imported cars from 35% to 5%.

The plan disclosure was made in the draft bill of the 2020 Finance Bill, ready to be presented to the national assembly.

Having been approved by the Federal Executive Council (FEC), the bill will become law after it is passed by the legislature and assented by President Muhammadu Buhari.

Details of the bill shared by the presidency, also showed that the import duty of tractors and motor vehicles for the transportation of goods has been slashed from 35% to 10%.

Explaining how the reduction in import duties and levies is targeted at reducing the cost of transportation, Zainab Ahmed, the Minister of Finance, Budget, and National Planning, stated: “The reason for us is to reduce the cost of transportation which is a major driver of inflation especially food production.”

What you should know

The Federal Government had in 2015 imposed the 35% import levy on cars to encourage local assembling of vehicles.

Recall that the development came two years after the government had raised the import tariff on vehicles from 22% to 70%, which was made up of 35% duty and 35% levy.

Is the reduction a smart move?

There was no better time to review the import tariff on vehicles than now. Unarguably, the amount charged by the Nigeria Customs Service (NCS) for import duty is huge, which has made the cost of vehicles expensive.

While the government imposed a costly levy on the vehicles to force people to patronise cars assembled in Nigeria, some questions that begged for answers may have made why the import duty has been effective. Some of the questions are -How can the government promise local assembly of cars when the requisite infrastructure has not been made available? How far can any car assembly firm function on generators? Where are the motor-parts factories in Nigeria?

This publication thinks it’s a smart move for the President Muhammadu Buhari-led government, as the move will curb the increasing rate of smuggling and at the same time, shore up the country’s revenue.