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A bill for an act for amendment of companies income tax

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LEAD DEBATE

ON

A BILL FOR AN ACT TO AMEND THE COMPANIES INCOME TAX ACT (CAP C21 LFN 2004) AND FOR MATTERS CONNECTED THEREWITH

Sponsored by Senator (Dr) Emmanuel Andy Uba, MFR (Anambra South)

Your Excellency, the President of the Senate, distinguished Colleagues I am highly honored and delighted to lead the debate on this Bill which seeks to amend the Companies Income Tax Act, Cap C21 LFN 2004. The broad philosophy behind the amendments sought through this Bill is to stimulate the growth of economic activities within the industry mining sector of the economy in order to create employment opportunities.

Distinguished colleagues will recall that the bill read the first time in this hallowed chamber on Tuesday, 7th September, 2011 would have been read the second time but for the vagaries of the time.

Today, we are examining the general principles of the Bill. I have the honour and privilege to inform the senate that this Bill has the blessing of some of my esteemed colleagues that is;

 

Senator Suleiman Asonya Adokwe

Senator Alkali Abdulkadir Jajere

Senator Bello Mohammed Tukur, OON

Senator Pius Akpor Ewherido

Senator Sahabi A. Ya’u

They are co-sponsoring the Bill with me.

The Bill specifically seeks to amend Sections 34, 36, 39 and 40 of the principal Act. The primary objective of the amendments are to encourage investments in the industrial and mining sectors of the economy in rural areas where ordinarily it would have been unattractive to invest; and these are the non-urban areas of the country; areas where there are no facilities and infrastructure are non-existent.

When this Bill is passed into law, it is expected that the economic activities that would be generated through tax moratorium assured by the passed Act will generally pilot the much canvassed employment opportunities for our qualified youths who today are roaming the streets in search of non-existent jobs; wasting scare energy pursuing mirages and falling prey to swindlers and conmen who promise them job that miscreants cannot provide. These expected economic activities to be generated by virtue of the provision of the amendments sought are expected to be concentrated more in the rural and semi-urban areas where infrastructures are lacking.

There will be no over- emphasizing the advantages and benefits to the country in having industrial and mining business organizations located in our rural communities.

Establishing new industrial projects in infrastructure- friendly areas that are already saturated with other establishments means limiting development efforts and concentrating them in those few areas. That in turn creates over-populated cities thus birthing other environmental hazards.

Further, industrial establishment require movement of heavy duty vehicle and establishment more in already developed areas would mean increase in the movement of heavy duty vehicles and brings about speedier deterioration of the road network in those areas and increase in the cost of rehabilitation and reconstruction of those roads when the money would have been used through the activities of the new establishments in opening up new areas and increasing the development index of the country.

With the establishment of business concerns in the rural areas and its attendant employment opportunities, there will be less movement of our youths and workforce towards the urban areas thereby stemming urban migration, and it will infact reduce the brain drain which has bedeviled this country for so many years.

We are all aware that there are so many industries located in rural areas in this country that have gone moribund. It is envisaged that with the passage of these amendments, the industries on being revived through recapitalization, acquisition, mergers and reconstruction, the job lost will be recovered. This will further enhance the economic well-being of the country.

Mr. President, my dear Colleagues, we have heard talks of Nigerians attempting to exit this country in search of employment opportunities. Some left the country legally some left illegally stowing away in propeller chambers of ships and tyre chambers of aircraft. Some went through the desert not sure of arriving at their destinations. Infact, a number of Nigerians disappear in the course of their attempt to leave the country and are never heard again. The amendments sought by this Bill, it is believed, will minimize such dangerous emigration and loss of lives.

With the passage of the Bill and its envisaged generated economic activities and growth, the much desired attraction of local investors in the economy will be achieved In that when a business concern is located in an area where infrastructures are lacking, after the establishment of the concern, it will take the concern more than five years to break even considering the investments made in making the establishment accessible and getting it running. With the Tax moratorium it is expected that the concern will start thinking of expansion after about ten years and that would bring about increased employment opportunities and better quality jobs. One should not forget that the improvement in available technology has created jobs that did not exist ten years ago. Examples abound in many areas. It is expected that some of these technology driven concerns can operate from the rural areas if the conditions are made conducive.

Again, my dear Colleagues, a business concern does not exist in isolation. Wherever a factory is established, there are jobs within the factory, jobs along the raw materials supply lines, and jobs along the products distribution lines. A lot of these jobs are not created directly by the factory but by the activities of the factory. In effect, the establishment of a factory in a rural area has a multiplying effect that cannot easily be calculated by a snap of the fingers. One should not forget that there are also local employment opportunities around a business establishment-restaurants, shop, hair dressing salons, vehicle repair sheds, vulcanizing points, tailoring shops, et cetera. With these, the economic wellbeing of the people of the area will be taken care of.

Mr. President, Sir, one might tend to contend that the tax moratorium being proposed would mean loss of revenue to the government, but this is not strictly correct in that the employment opportunities created would mean an increase in the revenue of the government in terms of personal income tax, sales tax and other incidental taxes that are linked to business activities. This is even one more way of empowering the State government.

Further, successes are not measured only in terms of naira and kobo. One of the primary functions of government is the welfare of the people. The establishment of the business concern will create employment opportunities and that in turn will improve the quality of lives of people of the area, improve the standard of educational institutions in the area and further impact on the quality of health delivery institutions that are available to the citizenry.

One other point that should be taken into consideration is the increase in the tax-free period being proposed for companies engaged in gas related industries. It is envisaged that this will help in the development of gas consumption methods in this country that will lead to delivery of cooking gas through pipes to our homes thus reducing the cost of cooking gas and discouraging the use of firewood that has been depleting our forests and increasing incidents of surface and gully erosion as well as desertification. Further, with the development of gas industry, the use of cylinders and canisters for the distribution of cooking gas will be reduced to the barest minimum. We all know how dangerous cylinders and canisters can be to the safety of lives and property in this era of our development.

Mr. President, my distinguished Colleagues, these amendments to the Companies Income Tax Act being sought through this Bill is for the good of all, and I and my colleagues are urging you to give the Bill your esteemed support for an accelerated passage because the country needs the amendments and needs them urgently; much more so when there are no visible cost implications with regard to the Bill.

I sincerely thank you for listening to me.

 

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The Senate | Federal Republic of Nigeria | National Assembly Complex | Three Arms Zone, PMB 141, Abuja | Nigeria