Environmental experts, reacting to the suspension of the Green Tax by President Bola Tinubu on Thursday, July 6, 2023, have said that the solution to the plastic pollution menace is outright ban on single use plastics (SUPs) and not taxation.
In line with his commitment to creating a business-friendly environment, the President ordered the suspension of the newly introduced Green Tax by way of Excise Tax on SUPs, including plastic containers and bottles.
Prior to the advent of the Tinubu Administration, certain tax changes were introduced via the Customs, Excise Tariff (Variation) Amendment Order, 2023 (henceforth referred to as “the Order”) published on May 8 and the Finance Act, 2023, which was signed into law on May 28.
Among others, the Order introduced new Excise Duty on SUPs, higher Excise Duties on some locally manufactured products, including alcoholic beverages and tobacco products, and Green Tax by way of Import Tax Adjustment on certain categories of imported vehicles.
While welcoming the suspension of the Green Tax, Dr Leslie Adogame, Executive Director of SRADev Nigeria, criticised the imposition of the tax in the first place, saying that stakeholders were not consulted.
“The Green Tax in place wasn’t a product of stakeholder agreement. The solution is a ban and not a tax
“The solution to SUPs is not only about taxation, its not a tax approach, but rather an outright ban. You can’t categorise all SUPs and put a blanket 10% tax. The SUPs, the low-hanging fruit, should be banned and others, such as the packaging plastics, can be taxed.
“Following the suspension, government should now take a thorough look at the situation and consult widely, by taking into consideration, for instance the Extended Producers Responsibility (EPR) being completed by the World Bank and the ongoing Environmental Regulation (Plastic Waste Control) in Nigeria by the National Environmental Standards and Regulations Enforcement Agency (NESREA).
“Government should consult with the ongoing processes, which are coming to fruition in the next few months, which have to do with banning SUPs and pronouncing a green tax on the ones that can’t be banned,” said Dr Adogame.
Speaking in a similar vein, Dr Eugene Itua of Natural Eco Capital opined that the suspension would “have a negative impact in terms of further generation of such plastics“.
He said: “However, to what degree were stakeholders engaged before signng into law? What was the intention? To simply generate money? What were the mechanisms put in place to ensure effective implementation with alternatives? These questions and more require going back to the drawing board for a better environment friendly law.“
In another scenario, Mr Paddy Ezeala, an environmentalist, said the Executive Order suspending the tax “smacks of poor environmental reflex on the part of The Presidency“.
His words: “To my knowledge, Green Tax is imposed to minimise carbon footpring and/or anthropogenic perturbation of the natural environment.
“Suspension of Green Tax would run counter to the Federal Government’s stance on climate change. Nigeria must be seen to be matching words with action with regard to position during the Conference of the Parties (COPs).
“Human impact on the environment is virtually unchecked and unregulated owing to existential exigencies, greed and poor and inadequate governance.“
While Prof Emmanuel Oladipo of the University of Lagos believes that the message the suspension is passing to the world is that the country is “not ready to implement the Climate Change Act”, Mr David Michael of the Global Initiative for Food Security and Ecosystem Preservation (GIFSEP) described the development as sad “because anything that is taxed people stay away from it”.
He submitted: “It was a great opportunity to reduce the heavy use of single use plastics and its associated impact on the environment. However, the suspension should provide an opportunity to reveiw the policy and reintroduce use soonest.“
Ms. Gbemisola Titi Akosa, Executive Director, Centre for 21st Century Issues (C21st Issues), stated that suspension of the green tax on single-use plastics in Nigeria can have several iimplications, both positive and negative:
Stressing the negative environmental impact, she described single-use plastic waste is a major contributor to environmental pollution and littering. Suspending the green tax, she noted, could lead to an increase in the production, consumption, and improper disposal of single-use plastics, exacerbating the existing plastic waste crisis in Nigeria.
“This can further harm ecosystems, wildlife, and human health,” she warned.
Shedding some light on increased dependency on plastics, she emphasised that suspending the green tax may encourage businesses and consumers to continue to rely on single-use plastics, as they become more affordable and accessible than alternatives.
“This could inhibit the transition towards sustainable and eco-friendly alternatives to plastic, such as biodegradable packaging or reusable options.”
On health risks, Akosa noted that single-use plastics, when improperly disposed of, can release harmful chemicals into the environment.
“Suspending the green tax may contribute to increased exposure to these chemicals, potentially affecting human health and well-being,” she said, adding that, because of the suspension, the country probably miissued an opportunity for behaviour change:
“The green tax is expected to encourage behavioural change among individuals and businesses towards zero tolerance for plastic waste generally, suspending the tax can dilute the message and hinder efforts to promote responsible and sustainable consumption,” she said, adding:
“We understand that the suspension of the green tax is a measure that needs to be taken in order not to exacerbate the already rising cost of living occasioned by the removal of fuel subsidies. This is a delicate balance and or complex trade-off that could derail advancement in ensuring a clean and healthy environment that can support a healthy and flourishing populace.
“We hope that the government will rethink this decision and take into account all the factors involved, including its commitments in the light of the Paris Agreement and make a decision that is in the best interest of people and the planet.”
On her part, Ms. Gloria Bulus of Bridge That Gap Initiative, a non-governmental organisation (NGO), described the developement as “a very wrong move at this time where plastic pollution is a threat and has become a global concern”.
“With the alarming rate at which plastic pollution is contributing to the environmental crisis, what then happens to the commitments in addressing these crises?” she demanded, adding:
“Looking at the purpose of green taxes, which is to make polluters pay in accordance with the ‘polluters pay principle’, without green tax, we automatically allow the polluters not to pay for the pollution but to go ahead with it. I also see more people may likely want to go into plastic production business as it does not have any tax.
“It is expected that the green tax will help to promote sustainable practices among individuals and corporations and reduce pollution, which will aid the transition towards a green economy. With the absence of green tax, we are heading for more environmental crises than we already have.”
An environmentalist, Mr. Ibrahim Muhammad, stressed that suspending the Green Tax which includes tax suspension on single-use plastics poses several implications for the environment and the global plastic pollution issue, especially with the growing momentum with this year’s World Environment Day themed “Beat Plastic Pollution”.
He listed some of the concerns to include: increased plastic waste, environmental degradation, missed opportunity for revenue and funding, and policy signaling.
His words: “On increased plastic waste, plastics that are only used once are a significant source of worldwide plastic pollution. There may be fewer financial incentives for companies and consumers to reduce their usage of single-use plastics because of the suspension of the Green Tax. This could result in more of these polymers being produced, used, and thrown away, worsening the issue of plastic waste. As a result, many species have become extinct or are in grave danger.
“Regarding environmental degradation, the effects of plastic contamination on the ecosystem are profound. Plastics pollute ecosystems for a very long time since they take hundreds of years to disintegrate. Plastics can be consumed by or entangled in by wildlife, which can result in harm or death. The Green Tax’s suspension might make these environmental risks more persistent.
“There could also be a case of missed opportunity for revenue and funding. Green taxes are frequently intended to raise money for environmental activities as well as to deter environmentally detrimental behaviour. By suspending the fee, resources that could be used to combat the plastic pollution issue may be constrained. This could reduce possible funding for environmental conservation and sustainability projects.
“Regarding policy signaling, the suspension of the Green Tax on single-use plastics may imply that the government does not place a high focus on environmental issues. This might affect how people see environmental programmes and deter people, corporations, and other nations from taking them seriously, slowing down the fight against global plastic pollution.”
Mr Olumide Idowu, Co-founder, International Climate Change Development Initiative (ICCDI), believes that the suspension of the tax means that there won’t be an additional charge or tax on activities that harm the environment. He feels this can be problematic “because the green tax is meant to discourage polluting activities and encourage environmentally friendly practices”.
He added: “Achieving net zero means that the country’s greenhouse gas emissions are balanced out by removing an equivalent amount of greenhouse gases from the atmosphere. It is an important goal in fighting climate change. However, without the green tax, there may be less incentive for industries and individuals to reduce their carbon footprint and adopt cleaner technologies.
“The green tax helps to fund renewable energy projects, environmental conservation efforts, and other initiatives that promote sustainability. By suspending it, the government might hinder the progress towards net zero in Nigeria, as it reduces the financial resources available for such projects.
“It’s important for governments to consider the long-term effects and the impact on the environment when making decisions about policies like the green tax. Finding alternative ways to encourage and support sustainable practices can help Nigeria move closer to achieving its net zero goals.”
President Tinubu on Thursday signed three executive orders to ameliorate the negative impactss of tax adjustments on businesses and households across affected sectors.
Mr Dele Alake, Presidential Adviser on Special Duties, Communications and Strategy, made this known at a briefing in Abuja.
The new orders affected the Finance Act 2023, the Customs, Excise Tariff and the Excise Tax on telecommunications as well as the Green Tax.
“The Finance Act (Effective Date Variation) Order, 2023, has now deferred the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023. This is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
“The Customs, Excise Tariff (Variation) Amendment Order, 2023. This has also shifted the commencement date of the tax changes from March 27, 2023 to August 1, 2023 and also in line with the National Tax Policy.
“The President has given an Order suspending the 5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.
“Further to his commitment to creating a business-friendly environment, the President has ordered the suspension of the newly introduced Green Tax by way of Excise Tax on SUPs, including plastic containers and bottles.
“In addition, the President has ordered the suspension of Import Tax Adjustment levy on certain vehicles,” he said.
Tinubu said that the review was part of his administration’s resolve to ease the lives of Nigerians and encourage corporate entities in spite of obvious challenges.
The president said that the reviewed tax were part of those signed in the twilight of the last administration.
“You will all recall that prior to the advent of this Administration, certain tax changes were introduced via the Customs, Excise Tariff (Variation) Amendment Order, 2023 (henceforth referred to as “the Order”) published on May 8 and the Finance Act, 2023, which was signed into law on May 28.
“Among others, the Order introduced new Excise Duty on Single Use Plastics (SUPs), higher Excise Duties on some locally manufactured products, including alcoholic beverages and tobacco products, and Green Tax by way of Import Tax Adjustment on certain categories of imported vehicles.
“The Tinubu Administration has since noticed that some of the tax policies are being implemented retroactively with their commencement dates, in some instances, pre-dating the official publication of the relevant legal instruments backing the policies. This lacuna has created some challenges of implementation.”
He said that the ideas behind upward adjustments of some of these taxes are quite noble because they were designed to raise revenue as well as address environmental and health issues of concern.
“However, they have generated some significant challenges for, and elicited serious complaints amongst key stakeholders as well as in the business community.
“A document known as the 2017 National Tax Policy approved by the Federal Executive Council of the last administration prescribes a minimum of 90 days notice from government to tax-payers before any tax changes can take effect.
“This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime.
“However, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted.
“As a result of this, many affected businesses are already contending with the rising cost, falling margins and capacity underutilisation due o various macroeconomic headwinds as well as the impact of Naira redesign policy.”
He stated that the Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024, which had already been approved, are also being implemented.
“But a further escalation of the approved rates by the current administration presents an image of policy inconsistency and creates an atmosphere of uncertainty for businesses operating in Nigeria.
“The Excise Tax of fiver per cent on telecommunication services has generated heated controversy.
“There is also a lack of clarity regarding the status of this tax, just as players in the sector also complain about the imposition of multiple taxes on their operations.
“We have also seen that the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on certain categories of vehicles require more consultation and a holistic approach to the country’s net zero plan in a manner that does not impact the economy negatively.”
In his inaugural speech, Tinubu promised to address business unfriendly fiscal policy measures and multiplicity of taxes.
These new orders were issued to ameliorate the negative impacts of the tax adjustments on businesses and chokehold on households across affected sectors.
Tinubu reiterated his commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions.
“The Federal Government sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation.
“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.”
He assured Nigerians that there would not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.
By Michael Simire and Ismail Abdulaziz
