Postpone Telecoms, Beverages Tax Implementation Until Inflation Reduces, Former Imo Finance Commissioner Urges FG

A former Commissioner of Finance in Imo State, Prof Uche Uwaleke has urged the federal government to postpone it’s implementation of the tax on data calls and beverages in order to check the rising Inflation in the country.

He said this in an interview with THE WHISTLER while reacting to the 19.64 per cent inflation rate which is the highest in the last 17 years.

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The last time Nigeria’s inflation was above 19.64 per cent was in September 2005 when it rose to 24.32 per cent.

The uptick in the inflation rate was driven by increases in the food and core index.

Further breakdown of the report shows that the urban inflation rate rose by 2.08 per cent to 20.09 per cent in July 2022 from 18.01 per cent recorded in July 2021, while the rural inflation rate hit 19.22 per cent from 16.75 per cent recorded in the corresponding period of 202

The federal government had said that it will begin the implementation of its proposed excise duties on telecommunication services and beverages in 2023.

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But reacting to the inflation rate, Uwaleke who is the Chairman of Chartered Institute of Bankers of Nigeria, Abuja chapter said the increase for the month of July was expected against the backdrop of rising inflation globally on account of supply chain disruptions from the Russian Ukrainian conflict.

Uwaleke, who is also the President of the Association of Capital Market Academics of Nigeria, said, “This outcome buttresses the argument that the monetary approach to tackling cost-push inflation does not lie in a hike in the Monetary Policy Rate.

“Recall that the MPC in its meeting last month increased the MPR by 100 basis points in a bid to tame inflationary pressure.

“The reality is that inflation expectations will continue to grow as long as the cost of petroleum products, electricity, exchange rate and insecurity continue to rise.

“Rising government deficits and borrowing tend to compound the problem.

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“I think the increase in core inflation has a lot to do with the recent scarcity of forex and associated volatility in exchange rates.

“I also think the gap between the high inflation rate recorded in Kwara state, where food inflation was highest and Kaduna State were it recorded the lowest rate is the partly the result of high transport costs.”

In the light of the country’s current situation, he said the most effective way to tackle inflation is for the government to find a lasting solution to the seemingly intractable problems of fuel imports and insecurity while the Central Bank of Nigeria deploys more of its development Finance function in a targeted fashion.

“In view of the elevated inflation rate, I advise the government to postpone the implementation of the Telecoms and Beverage tax till the inflationary pressure is significantly subdued,” he added.

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