Minimum wage: Analysts canvass tax waivers for small businesses
Federal Inland Revenue Service
Economic analysts have called on the government to give the organised private sector tax waivers to enable it to pay the newly approved N70,000 minimum wage.
A Professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, told the government should give tax incentives to micro, small and medium enterprises.
According to the professor, firms with larger operations that already pay beyond the new minimum wage should be excluded from the tax incentive.
Ekpo said that the best way for the government to support members of the organised private sector, who cannot afford to pay a N70,000 minimum wage, was to ease their taxes so that they could be used to pay the wage.
“The break (for SMEs) should be a tax incentive. In other words, (the government should) reduce their tax burden. It is difficult for the government to start giving them handouts, but I will support them getting a reprieve from the government to help them pay the minimum wage,” the economist said.
He justified the need to assist SMEs by stating that small businesses had been through challenges, including foreign exchange instability and epileptic power supply.
Ekpo said there would be a risk of massive layoffs by SMEs if they were not assisted.
“Some of them (SMEs) were not paying the former amount of N30,000 before it was increased,” he noted.
Another economist and the Chief Executive Officer of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, in a chat with The PUNCH, agreed with the position of the OPS.
Yusuf said that the current operating environment was extremely challenging for most businesses in Nigeria, especially in the real sector and small businesses.
“There are macroeconomic headwinds, there are structural impediments, and there are multidimensional supply chain challenges. The profitability and sustainability of many businesses are at risk,” the CPPE boss said.
Yusuf remarked that despite the plight of workers amid the cost of living challenges, the difficult operating environment for businesses was equally troubling, and there was a need to balance the two sides.
“These two considerations matter in this conversation and require some delicate balancing. It is only a thriving business that can retain or create new jobs,” he said.
The Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, recently called on President Bola Tinubu to fulfil his promise that the Federal Government would assist the organised private sector to pay the newly approved minimum wage.
Tinubu approved a new minimum wage of N70,000 on July 18 and pledged to review the national minimum wage law every three years.
In a statement, Ajayi-Kadir welcomed the new minimum wage as a positive development and an outcome of further negotiations between the Federal Government and organised labour with the intervention of the President.
He stated that manufacturers had earlier expressed the challenges confronting their businesses to the tripartite committee and the need to improve their capacity to pay the minimum wage.
Ajayi-Kadir added that manufacturers maintained that those constraints may negatively impact the full compliance of the members of MAN when a new minimum wage is signed into law.
The MAN DG declared that the organised private sector demanded MSMEs be exempted from paying the new minimum wage as they were incapable due to prevailing operational challenges.
Ajayi-Kadir said other demands by the private sector included that the CBN redeemed all validly transacted outstanding forex forwards for companies in the productive sector and reversed the increase in electricity tariffs or have a 100 per cent increase in electricity tariff for a minimum of 20 hours of supply.
Also, the OPS demanded a duty exemption on imported conversion kits, the introduction of a government subsidy on procurement of the same, and a freeze on the introduction of new taxes on businesses for the next five years.
It also called for a fixed rate of N800 for the assessment of import duty on all production inputs, a revisit of the recent Financial Reporting Council regulation to curtail its application to private businesses and a discontinuation of the Price Verification Portal, as it was inimical to the smooth operation of businesses and the basis for setting it up no longer exists.
However, Ajayi-Kadir noted that the CBN had implemented the discontinuation of the Price Verification Portal.
