The Federal Government has raised duties on luxury goods such as yachts and Sport Utility Vehicles (SUVs) imported into the country. But also affected are some food items such as rice, salt and sugarcane that have local alternatives.
Under the new Economic Community of West Africa (ECOWAS) Common External Tariff (CET) regime which administers import and export tariffs within the West African sub-region in the movement of goods, importers of yachts and other luxury automobiles such as SUVs, boats, sports cars, and other vessels used for pleasure are now to pay 70% of the value of the vehicles as taxes (duties) to the Nigeria Customs Service (NCS). The new rate is a jump from the 20% which the owners currently enjoy. The increase is contained in a circular by the Minister of Finance, Mrs. Kemi Adeosun to the NCS.
Other major items affected in the duty increase include sugar cane and salt from 10% to 70%; alcoholic spirit, beverages and tobacco from 20% to 60%; and rice from 10% to 60%. Also included on the list are packaged cement, from 10% to 50%; cotton/ fabrics materials, from 35% to 45%; and used cars popular known as Tokunbo, from 10% to 35% respectively.
Medicaments such as anti-malarials and antibiotics; crude palm oil; wheat flour; tomatoes paste; and cassava products are also affected in the upward review of duties. But essential industrial sector accessories, including bolt, industrial oil and other equipment are to enjoy a downward review to spur local industrialisation. The cut in the import tariff on items for industrial use may encourage entrepreneurs whose industries are shut down due to the high duties paid on imported components. Such companies may resume or expand their operations as a result of the incentives.
However, while the new policy may trigger a rise in the prices of some consumable goods until the demand for them is met locally, the NCS, which has been grappling with meeting the fiscal target set for it by the Federal Government may boost its revenue.
The policy which is coming on the heels of the recent ban by the NCS on all vehicle imports through the land borders in the country, as part of measures to curb smuggling of particularly used cars into the country is going to see citizens pay higher for used cars popularly known as "Tokunbo.”