The Abuja Chamber of Commerce and Industry, as well as some finance and economic experts, on Friday disagreed with the call by the International Monetary Fund that the Federal Government should stop granting tax waivers and exemptions to companies.
The IMF had advised the Federal Government to urgently revisit tax holidays and exemptions given to companies. It specifically urged Nigeria to implement a reform that would phase out tax holidays and exemptions which, it said, were eroding the Company Income Tax base.
But speaking on the development, the Director-General, ACCI, Mr. Chijioke Ekechukwu, said globally, tax incentives had proved to be a catalyst for industrialisation.
He said for a country that was seeking to boost industrial development and improve the ease of doing business, tax waivers were necessary to encourage the flow of foreign direct investment into the country.
He described the call by the IMF as unacceptable, pointing out a lot of businesses in Nigeria needed the incentives to be competitive owing to the harsh economic climate.
He said, “Globally, tax incentives are used to drive the growth of economies. Tax incentives are given to start-ups, the Micro, Small and Medium-scale Enterprises, manufacturers, exporters and any other sector that is the focus of government.
“Tax incentives are used to encourage and drive the FDIs. Incentives can come in various forms that are geared at giving encouragement to any sector of focus of the economy.
“It is therefore unacceptable to our economy and country that the IMF is asking the Federal Government to stop such incentives.
“What we need is efficiency of tax implementation. Seventy per cent of businesses in Nigeria are under paying taxes while many small businesses are over paying in multiple taxes.
“A good number of businesses are not even paying at all. What we therefore need is efficiency in the tax system and not removal of incentives.”
Also speaking, the Head, Department of Banking and Finance, Nasarawa State University, Keffi, Uche Uwaleke, said asking Nigeria to stop tax incentives used to encourage local firms and promote essential commodities just to enable the government save some money would be counter- productive.
Uwaleke, an associate professor of Finance, said, “There is no denying the fact that the IMF is interested in the economic progress of member nations particularly developing countries. This is why it offers advice from time to time to troubled economies with a view to getting them on the path of sustainable growth.