Recent media reports and previous probes conducted by the National Assembly indicate that the executive arm of government has abused and continues to abuse the grant of import duty waivers. Ideally, the Customs and Excise Management Act provides for conditions to be fulfilled before imported goods will be duty exempt. The provisions for exemption relate to relief of duty for goods imported temporarily and which may be re-exported or consumed on board the importing ship or aircraft and goods entered for transit or trans-shipment. The provisions also relate to relaxation of duty on composite goods or where it appears inequitable to the Customs Board to charge duties on the goods. Also, under the Customs, Excise Tariff, etc (Consolidation) Act, goods specified in the Second Schedule to the Act, imported into Nigeria, shall subject to such conditions as are set out therein be exempted from duties set out in the customs duty rate. Duty relief also relates to certain goods re-imported into Nigeria after exportation. Essentially, there must be some higher legal, economic and noble interest to be served by the duty waiver. Otherwise, the goods will be subject to ad valorem duty.Duty on imported goods serves a number of purposes. It is a revenue generating measure for government and helps to protect local industries from unfair competition from established international competitors. By keeping the local industries in business, jobs are created in the economy and government derives taxation from the profits of the firms. Since the return to civil rule in 1999, the abuse of fiscal resources by the Federal Government has been used for the purpose of financing elections. This finds resonance in import duty waivers as a means of granting favours to the ruling party and candidate financiers (godfathers) who in turn donate generously to party and candidate expenditure. In the run-up to the 2007 elections, verifiable reports by the House of Representatives Committee on Customs and Excise indicate that Nigeria lost over N380 billion in import duties which were waived by the Federal Government to its crony importers. The waivers were granted to friends, relations and associates of highly placed operatives in the administration.The practice had started before the 2007 elections but only got accentuated close to the said election. The law provides for waivers to be granted in the public interest and these can be justified, for instance, in the construction of the Liquefied Natural Gas Project, the zero duty on rice during the 2008 food crisis, etc. By a directive issued in Circular No.12 of 2000 dated October 5,2000, reference number NCS/DCG/CUS/018/S.4/vol.8 and sent to all zonal coordinators and customs area controllers, customs officers were effectively asked to ignore requests and grants for import duty waivers unless approved personally by the President. It was this directive that former President Obansanjo used to personally grant all sorts of frivolous waivers.It was reported that in the year 2011, the Federal Government granted import duty waivers on rice and palm oil worth over N150billion to 10 firms in 10 months. A company registered to undertake the business of bookshops and stationery stores got duty waivers to import refined palm oil. Other companies got duty waivers to import the same commodities. The pertinent question raised by these waivers is; whose interest is served by the waivers' Surely, not the national interest but the interest of those waiving the duty. This report, coming at a time the government claims to be promoting fiscal consolidation shows the lie in such outlandish claim.These waivers subvert the duty of the Nigeria Customs Service to collect revenue and account for the same, generate statistics for planning and budgetary purposes, monitor foreign exchange utilisation and engage in the enforcement of governments fiscal policies. The waivers also short-change the Federation Account as billions of naira that would otherwise come in as revenue is diverted to the pockets of a few. It is on record that customs duty, in terms of non oil revenue is the third largest taxation after Companies Income Tax and Value Added Tax. In 2008 and 2009, the sums of N281.26 billion and N299.94 billion were paid into the Federation Account from Customs and Excise and in 2010, the sum of N309 billion was realised from this source.The waivers short-change trade facilitation, competitiveness and distort prices and the market mechanism in the economy. Businesses that did not get the waivers and who are in the same sector with those that enjoyed waivers would not be able to compete effectively thereby giving those that enjoyed waivers an undue advantage. Indeed, these waivers fly in the face of various provisions of the Customs and Excise Management Act, the Economic and Financial Crimes Commission Act and the Corruption and Other Related Offences Act. It is an economic crime, economic sabotage and an act of corruption to grant duty waiver to goods knowing the same as ineligible for such waiver. No matter how highly placed the person(s) waiving the duty, a crime is a crime.Further, the waivers subvert the constitutional principle of federalism and its concomitant distributable pool account established under section 162 of the Constitution. By granting the waivers, the federal government waives revenue that does not belong to it alone but belongs to the three tiers of government. It therefore unilaterally short-changes other tiers of government of their due revenue through the reckless exercise of a power it holds in trust for all the other tiers of government. The customs duty waivers make unavailable, monies which would have been channelled to the fulfillment of basic rights including education, housing, health, access to clean water etc. And this has contributed in no small measure to Nigerias impending failure to meet the Millennium Development Goals, its perennial poor rating by Transparency International on the Corruption Perception Index, Mo Ibrahim Index and the Open Budget Index, etc.The States are complaining of paucity of resources to execute developmental programmes while the Federal Government is busy short-changing them by waiving distributable revenue. Even though it makes sense for Customs and Excise to be on the Exclusive Legislative List, the States should insist that a committee consisting of the representatives of the Federal and State Governments should be charged with the consideration and approval of duty waivers. If the Federal Government insists on a unilateral right to waive revenue, it should be granted the right to waive the portion of the revenue that would have accrued to it if the duty was paid while allowing the states to collect the part that should have accrued to them. Such waivers and the reasons informing them should also be published in the media for public information. This is the only way to stop this abuse of power.- Eze Onyekpere is the Lead Director, Centre for Social Justice. He can be reached on censoj@gmail.com and 08127235995.
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