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Expert Advise FG To Remove Tariff on Gas Containers

The Chief Executive Officer, Gas Initiative Nigeria, Mr. Taiwo Odediran, has urged the Federal Government to remove the tariff on the importation of containers of compressed gas into Nigeria.

Odediran, during a news conference in Ilorin on Thursday, said the total tariff, as exemplified under the Customs and Excise Tariff, and put at 67.5 per cent, is antithetical to the gas economy aspiration of the President Bola Tinubu-led administration.

He said, “The newly revised Import Adjustment Tax of 40 per cent for containers of Compressed and or Liquefied Gas which has now brought total tariff payable for this item to 67.5 per cent is making a mockery of and establishing a direct huddle to the nation’s gas economy aspirations.

“It is a mild statement to state that the tariff is bogus and excessive and thus calls for a prompt review. There can be no gas utility without its containment or storage in steel pressure vessels. Gas containers or tanks are a compulsory part of any gas utility infrastructure.

“Sadly, your administration’s conscious drive towards a gas-based economy is being threatened by the unrealistic tariff on the Storage Tanks which is one of the key components of Gas Utility as stated above.

“At present, the total tariffs on gas containers and storage under the Customs and Excise Tariffs (CET) stand at 67.5 per cent. These consist of 20 per cent ID, 7.5 per cent VAT and 49 per cent IAT.”

Odediran noted that it was surprising to the stakeholders in the gas industry to discover that the gas storage tank, an item crucial to Tinubu’s gas economy aspiration, could carry the highest taxes in the whole of the nation’s customs and excise tariffs.

He noted that the “bogus” taxes on such an item, no longer drive the economic sector of any nation, positively.

For him, “as it is widely known, tariffs have three primary functions: to serve as a source of revenue, to protect domestic industries, and to remedy trade distortions (punitive function).

“The revenue function comes from the fact that the income from tariffs provides governments with a source of funding. In the past, the function of revenue was indeed one of the major reasons for introducing tariffs, but economic development and the creation of Systematic Domestic Tax have reduced its importance.”

He cited Japan as a typical example of an industrialized powerful nation that in a few years ago generated about one trillion Yen in tariff revenue, arguably believed to be less than two percent of her Total Tax Revenues.

Odediran commented that if the bogus tariffs are either completely removed or reduced, Nigeria as a nation would earn more income from vast Domestic Gas Consumption under a Gas Based Economy than possibly from Import Tariffs on Gas Utility Facilities and tools such as storage or containers.

He added, “Tariff is also a policy tool to protect domestic industries by changing the conditions under which goods compete in such a way that competitive imports are placed at a disadvantaged position.

“Unfortunately we are yet to succeed with steel production in Nigeria. No single mill produces rolled steel sheets which is the sole material for manufacturing pressure vessels for gas containment and or storage.

“Until then, there can be no significant domestic investment in manufacturing of pressure vessels for gas containment or storage that justifies the current outrageous tariff of 67.5 percent for the importation of this item, more so when we desperately need to have a robust gas economy.

“It is a big surprise to us that, unlike other items under the Article of Iron and Steel Chapter in the CET, containers for compressed or liquefied gas carry the highest taxes of 67.5 percent. We unequivocally believe that this must have either been done in error or that some economic saboteurs may deliberately be at work to discourage the continued flow of investments in gas infrastructure.

“It is not rocket science or an abstract economic theory to know that if gas must be a common thing on Nigerian streets, the item for its containment or storage must be easier to come by. But it will remain a tall dream under this ridiculous tariff of 67.5 percent on the importation of gas storage tanks,” he said.

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