LCCI canvasses derivation principle on customs duties, VAT

Lagos Chamber of Commerce and Industry (LCCI) is canvassing for a derivation principle on customs duties and Value Added Tax (VAT) for states that host major Nigerian ports.
Speaking at the quarterly State of the Economy Press Briefing on Thursday in Lagos, Babatunde Paul Ruwase, president of LCCI, said ports often created profound negative externalities to host states and put tremendous pressure on facilities in the state, significantly affecting roads, health facilities, traffic, environmental management, and pollution.
Ruwase stated that in the light of costs borne by states in which ports were located, application of the derivation principle should be applied to revenues generated through the custom duties from the ports.
“We propose a replication of derivation principle applied to the oil producing areas. The basis of derivation principle to the oil producing area is the negative externalities of oil production. The same logic should apply to Lagos State that suffers tremendous negative externalities, because it is hosting the busiest ports in the country. The 13 percent derivation applied to oil producing areas should also apply to states hosting the ports,” he argued.
According to Ruwase, the abandonment of Federal Government properties remained a colossal waste and served as hideouts for hoodlums, criminals and miscreants.
He cited some of the buildings as the old National Assembly complex at Tafawa Balewa Square, Independence Building that used to house the Defence Ministry and the former Federal Ministry of Commerce at Tinubu Square.
“We urge the Federal Government to either return the property to the Lagos State government which is the original owner of the land, or give them out on lease to the private sector,” he said.
On Apapa gridlock, he commended the decision of the Federal Executive Council to award a N72 billion contract to fix the road leading from the Lagos ports to the tollgate, but stressed the need to urgently restore order and sanity to the Lagos ports and improve access to them.
“The rail system needs to work, the capacity of the ports needs to expanded, the pipelines for the transportation of petroleum products need to be made functional, and the tank farms need to be better dispersed,” he said.
On the bill that seeks to compel companies to adopt Corporate Social Responsibility (CSR), the LCCI president said CSR should be at the discretion of organisations as making it compulsory would amount to another form of taxation.
“Businesses continue to struggle due to challenging business environment such as multiple taxation, arbitrary fees and levies. The CRS bill will only worsen the situation. We propose that a robust incentive framework be provided to encourage corporate organisations to voluntarily undertake CSR programmes and activities,” he said