Business
Tax Evasion: Nigeria Loses N85bn From Auto Industry
Despite claims of surpassing the revenue target set for the Nigeria Customs Service (NCS) by the Federal Government, the country has lost a whopping N85.2bn in revenue from tax evasion to grey market operators in the automobile industry over the last four years, the Managing Director, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has said.
Describing the loss as mind boggling, Rewane, a renowned financial analyst, in a report released to The Tide source by his company, said the loss was equivalent to 4.5 per cent of the total exports of Kenya or four per cent of the total exports of Ghana.
“This amount could fund the construction of one petroleum refinery or a modern power station with 1,000 Megawatts capacity,” he said.
Rewane explained that the grey market was situation in which goods were imported inappropriately into a market without the manufacturers’ consent, thereby short-changing the authorised dealers.
The NCS leadership had always said it surpassed the projected revenue over the same period due to some stringent measures put in place to check revenue leakages.
The Comptroller-General of Customs, Alhaji Dikko Abdulahi, had attributed the feat to the stringent measures he put in place to closely monitor revenue performance and block leakages.
The measures, he said, included the creation of a system audit unit at the headquarters to monitor duty payment in all ports; automation of the entire Customs clearance procedure, which would allow for faster and smoother clearance; and improved quality of workforce that was better trained and well motivated.
However, Rewane said the revenue loss was too staggering when viewed on a leveraged basis of one to three, adding that it could finance the rehabilitation of two seaports and two modern airports, with an income per capita of $1,500 and infrastructure gap of $200bn.
The FDC CEO rued the monumental loss of government revenue arising from the grey market, which he said was affecting government revenue from both direct and indirect taxes.
According to him, while direct tax loss comes from reduced sales and profits in the legitimate automobile industry, indirect tax loss comes from the Customs duties and excises.