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Manufacturing contributed N946bn as FG earned N5.34tr from VAT, CIT in 2022

Despite the numerous challenges facing the manufacturing sector, it contributed N946 billion, being the highest amount of tax to the federal government from Value Added…

Despite the numerous challenges facing the manufacturing sector, it contributed N946 billion, being the highest amount of tax to the federal government from Value Added Tax (VAT) and Company Income Tax (CIT) in 2022.

According to reports from the National Bureau of Statistics (NBS), the government was able to generate N946bn from the sector out of the N5.34 trillion collected for both taxes during the year.

Analysis by Daily Trust indicated that the sector generated N157.53bn in the first quarter; N293.48bn in the second quarter; N253.31bn in the third quarter and N90.4bn in the fourth quarter.

The second highest contributing sector is information and communication, which contributed N631bn during the period.

This is followed by financial and insurance activities that contributed N318.17bn, mining and quarrying, N300bn, public administration and defence, compulsory social security N224bn, other service activities N149.16bn, transportation and storage N131,69bn.

Others include wholesale and retail trade, repair of motor vehicles and motorcycles N127.88bn, Construction N53.31bn, Professional, scientific and technical activities N48.8bn, Electricity, gas, steam and air conditioning supply N43.72bn, Education N41.66, Accommodation and food service activities N30.6bn, Administrative and support service activities N30.36bn, Agriculture, forestry and fishing N28.45bn.

Arts, entertainment and recreation generated N18bn, human health and social work activities N17.59bn, Real estate activities N11.73bn, Water supply, sewerage, waste management and remediation activities N3.41bn, Activities of extraterritorial organizations and bodies N3bn, Activities of households as employers, undifferentiated goods- and services-producing activities of households for own use N426m.

Recalled that the two taxes contributed 50 per cent of the total N10.44tr generated by the Federal Inland Revenue Service (FIRS) in 2021 when compared to the total money generated in 2021, VAT and CIT generated in 2022 amounted to over 80 per cent of the total N6.4tr revenue the service generated last year.

The manufacturing’s large contribution to government coffers comes on the heels of a survey conducted by the Manufacturers Association of Nigeria (MAN).

The report, titled various Manufacturers CEO Confidence Index (MCCI), stated that the inadequacy and high cost of energy have been identified by manufacturers as the core challenges of manufacturing operations in the country.

“Nigeria has over 200 million people and a huge productive sector that is energy-dependent, but electricity distributed in the country has been a mere 4000MW.

“This explains the reason why in the various Manufacturers CEO Confidence Index (MCCI) reports, poor supply of electricity has been continuously ranked among the top challenges of the sector.”

It added that the energy challenges are variously represented as the cause for the poor competitiveness of the economy and manufacturing sector.

It said the country has continuously failed to exploit energy resources it has to the benefit of the economy.

“As a member of the Organization of Petroleum Exporting Countries (OPEC), production of crude has continuously fallen below OPEC’s quota for the country due to gross inefficiency in the management of the oil sector. In addition, Nigeria’s four national refineries with 445,000 bpd capacity are down.”

The report said this has made the manufacturing sector heavily depend on high-cost alternative energy.

It however urged the federal government to; “Review the current status of the four national refineries to determine their current true state, commission the CHIYODA Group, the Japanese company that built the national refineries, to rehabilitate them to resume domestic refining; review the Nigerian energy policy and ensure available energy sources, particularly natural gas, is optimally explored and exploited.”

It also called for the creation of a functional incentive to attract private sector investment in gas aggregation to end the current gas flaring and incentive to resuscitate private sector investment in the petrochemical industry.

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