July 19, 2009

OPS rejects Social Responsibility Tax

By Omoh Gabriel, Business Editor
LAGOS—Members of the Organised Private Sector (OPS), in the Nigerian economy, comprising the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Manufacturers’ Association of Nigeria (MAN), Nigerian Association of Small-Scale Industrialists (NASSI) and the Nigerian Association of Small and Medium Enterprises (NASME), are opposed to the plan to introduce a Corporate Social Responsibility (CSR) Tax on businesses in the country through the CSR Commission Bill.

OPS has described the bill, which is currently before the National Assembly, as obnoxious. It added that the bill is not in the interest of businesses in the country.

A statement signed by the director-generals of the private sector organisations highlighted the danger the proposed bill poses to businesses in the country.

According to the managers of these organisations: “The OPS is concerned of the effects the CSR Bill would have on operators in the real sector of the economy, as well as on the standard of living of the citizenry, if passed into law. The position of the business community had been communicated to the lawmakers through a recent Public Hearing on the Bill in Abuja and also through two stakeholders’ meetings in Lagos.

“Hence, the OPS has decided to draw the attention of all and sundry to this obnoxious bill being considered by the lawmakers. The OPS, having reviewed the bill, is totally opposed to it. This is because the bill is not in the interest of the business community, the citizenry and the economy, and it contradicts the Federal Government’s drive of promoting real sector development, as encapsulated in the seven-point agenda and the Vision 2020 document of this administration.

”Any attempt to introduce a CSR Tax on businesses will constitute additional burden to the multiplicity of taxes which the Federal Government is presently addressing. This could also discourage genuine local and foreign investors currently operating in the country, and prospective ones, thereby eroding the gains being achieved by the Federal Government on the attraction of Foreign Direct Investment (FDI).

“The business community is unanimous in opposing this obnoxious sill based on the following: No country in the world has legislated on Corporate Social Responsibility {CSR), as it is voluntary and not mandatory; hence, OPS strongly opposes the CSR Bill in its entirety.

”CSR is a voluntary initiative undertaken by companies to positively impact on their immediate operational environment and does not require any law.

The cost of doing business in Nigeria is already high, which has continued to pose grave challenge for enterprises. Businesses are already over-burdened with over 150 multiple taxes and levies from the federal, states and local governments; there is, therefore, no need for more “taxes”.

“The functions, which the CSR Bill seeks to assign to the commission, are already within the purview of existing government departments and agencies such as the Ministry of Environment (for environmental issues); Ministry of Labour, the Corporate Affairs Commission and the Ministry of Internal Affairs.

”International best practices have never been to mandate CSR and corporate governance through legislation, but rather encourage companies to voluntarily carry out CSR and good governance.

”A number of companies in Nigeria are already committing trillions of naira on CSR activities. The bill will further encourage corruption in the country as enforcement officers would, as usual, take undue advantage of the situation to extort money from companies.

“The OPS, therefore, wishes to make the following recommendations to the Federal Government and leadership of the National Assembly: The idea of legislating CSR should be stopped and the CSR Bill jettisoned. This is in view of the fact that the establishment of a commission on CSR will create a new avenue for corruption in Nigeria. It would also not be in the best interest of Nigerians or assist in realising the seven-points agenda and Vision 2020 of this administration.

”Government should offer tax incentives to companies that are socially responsible and are already involved in CSR activities as a form of encouragement to those companies and others who may wish to emulate their action,” it added.

The highlights of the CSR Commission Bill imposes on corporate bodies the duties of conducting research and investigation of the needs of host-communities, identifying socially responsible behaviour of organisations in compliance with legislation,  classification of corporate organisations, ranking them according to organisational size and magnitude of investment, which shall determine the nature of corporate social responsibility expected of them.

Others are, serving notices of social responsibility requests to organisations, developing environmental guidelines to be met by organisations doing business in Nigeria, pegging and monitoring the implementation of local contents in terms of employment and sourcing of raw materials, imposing sanctions through fines or offering incentives temporarily shut down and suspend operations of an organization corporation or a company for a minimum of 30 working days as a penalty for non-compliance.