…as Finance minister discloses FG’s injection of N1trn palliative into manufacturing sector
NOSA EGHAGHA
ABUJA, Nigeria – The National Assembly has passed amendment to the 2023 Finance Act with a proposed sharing formula that would allow the Federal Government to keep a lion share of 70% of the Windfall levy imposed on all foreign exchange transactions by banks in the country.
The levy which takes effect from January 2024 was sequel to the adoption of the report of its Joint Committee on Finance which also recommends a 10% penalty on defaulters who fail to remit government’s share of the Windfall Profit levy into the Federation Account.
Both chambers of the National Assembly agreed that a lion share of 70% of the windfall profit levy imposed on banks should go to the Federal Government, leaving the banks with the remaining 30%.
The National Assembly reached the sharing formula after it considered the report of its committee on Finance.
President Bola Tinubu had last week requested the National Assembly to amend the Finance Act that seeks to impose 50% Windfall Profit levy on all the foreign exchange transactions by banks in the country.
Interestingly, while the Federal Government had proposed a 50-50 sharing formula, the lawmakers increased the share of the Federal Government to 70%.
The windfall profit levy is to take effect from January 2024 with the National Assembly carefully avoiding making a retrospective law that would include 2023.
The Minister of Finance, Wale Edun has in the last two days led the FG economic team to defend the windfall profit levy, which he said is primarily aimed at redistributing money the surplus gains earned by banks as a result of change in government foreign exchange policy.
The Governor of Central Bank of Nigeria, who was represented at the stakeholders meeting on Tuesday supported the Windfall Profit levy, confirming that its earlier circular in March asking banks not to tamper with the windfall profits subsists.
The amendment by the National Assembly also imposed a 10% penalty on defaulters of the windfall profit levy at prevailing interest rate.
The Chairman, Federal Inland Revenue Service (FIRS), Zacch Adedeji, said the absence and silence of the banks on the matter can be taken as “consent”.
Also at the meeting, the minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun disclosed that the Federal Government of Nigeria has injected palliatives worth N1trillion into the manufacturing sector within the last one year.
Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji, highlighted efforts by the government to make viable, the manufacturing sector.
He said the Tinubu administration injected the accelerated stabilisation fund aimed at reinvigorating the manufacturing sector stressing that this is aside series of legacy projects, geared towards putting in place infrastructure to strengthen the sector.
Edun, who said the manufacturing sector should be considered as beneficiary from the proposed tax on banks foreign profits (windfall tax), said the sector has already been taken care of.
“Palliatives worth N1trillion have been injected into the manufacturing sector within the last one year with attendant positive results in terms of reinvigoration,” he said.
Earlier in his presentation to the joint committee Chaired by Senator Sani Musa (APC Niger East), the Chairman of FIRS, Zacch Adedeji, said the proposed one time windfall tax, is geared towards redistribution of wealth which according to him, would be beneficial to the various sectors.
He, however, explained to members of the joint committee that strategic programmes of President Bola Tinubu led federal government, are targeted at reinvigorating the manufacturing sector.
“Accelerated stabilization fund focusing on helping the manufacturing sector are already being doled out aside legacy projects strategically targeted at making the sector more vibrant and viable .
“Some of these strategic projects that would in terms of infrastructure , reinvigorate the sector , are the Badagry – Sokoto Highway which would make journey from Badagry to Sokoto 11hours
“Also, Lagos – Calabar Coaster Highway is another strategic road infrastructural project that will bring about the required connectivity for reinvigoration of the manufacturing sector.
“The plan of President Bola Tinubu on the economy, manufacturing sector and development generally is very robust,” he said.
President Tinubu had in an executive bill forwarded for approval by both chambers of the National Assembly, proposed 50% sharing formula for both parties, which some members of the committees, suggested for upward review.
