Business operators kick as tax, power tariff soar

  • New electricity tariff, company tax counter-productive, say operators
  • Increase in power bill in the interest of all -NERC


Uba Group

Operators of small and medium scale enterprises may witness more hardship in 2016 if the Federal Government sustains certain tariff policies, experts have said.

With the new electricity tariff and the proposed implementation of the presumptive tax regime for the informal sector, especially the SMEs, the threat of hard times ahead becomes more concrete.

Investigations revealed that the proposed implementation of the presumptive tax regime had sent shock waves among SME operators in various sectors of the economy.

Under the new electricity regime, energy charges of SMEs in the Abuja Electricity Distribution Company will increase by N9.60/kwh, while their counterparts in Eko and Ikeja electricity distribution areas; Ka-duna and Benin electricity; Ibadan and Enugu, will have an increase of N10/kwh and N8kwh; N11.05/kwh and N9.26/kwh; N12.08/kwh and N13.35/kwh, respectively.

Members of the organised private sector and other key stakeholders argue that, while the development will increase the revenue made by the Federal Government, particularly as the government needs to shore up its internally generated revenue against the consistent slide of crude oil prices, the imposition of the tariff will slash the meagre profits they make by over 50 per cent.

The consensus is that, previously, irregular power supply, ‘crazy bills’ and multiple taxes from the three tiers of government have been a menace that have eaten into the fabric of the SMEs, and that with the new policies, the situation is likely to get worse, as it is capable of forcing some of them to stop operations and thus shoot up the unemployment rate in the country.

The Managing Director, Obiwugo Farms, manufacturer of Zobo Cola, a company based in Owerri, Imo State, Mr. Stanley Obinwugo, lamented that the increment by Government was designed to frustrate small-scale entrepreneurs.

According to him, the development is an indication that the regulators are insensitive to the plight of industrialists, who are burdened with the lack of infrastructure across the nation.

He said, “If the tariff must be increased, government must ensure that power supply is increased and also fix decayed infrastructure in the country. Asking us to pay more for facilities we do not get is absurd and inhu-man. We provide water, power and roads ourselves because the government has abandoned us to our fate.

“I have paid for prepaid meters for my two factories so as to monitor my consumption rate but I have not received them for about two years. The first thing they ought to do is to distribute the prepaid meters, then things will be more organised.”

Obinwugo also told The Point that he found it difficult to transport his wares to the northern part of the country because of the poor state of the roads, which had made the cost of transportation to skyrocket.

According to him, most SMEs do not move their goods across the country but rather stick to their areas.

This, he said, would limit them from spreading their tentacles and in return, reduce the profit made.

“Some SMEs deliberately do not pay tax because they believe the gov-ernment has not provided any infrastructure for them; so they don’t have any obligation to pay the tax. Multiple taxation should be addressed by the government. My company pays tax to the Federal Inland Revenue Service yearly, while the state and local government collect tax on health, business premises and advertisement,” he com-plained.

The Chief executive officer, Kasso Flakes, Lokoja, Kogi State, Mr. Simon Ocheni, attributes the dearth witnessed in the real sector to the negligence on the part of the Federal Government to support small-scale industries, which in return grow the economy.

According to him, no developing economy can grow without nurturing and creating a friendly business environment for its SMEs because they are the engine rooms of any strong economy and also the largest employers of labour.

“Only the ones (SMEs) that are


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