THE TAX RELIEF DECLARED BY HIS EXCELLENCY, GOVERNOR IFEANYI UGWUANYI IN ENUGU STATE , A BIG FINANCIAL BOOST TO THE GOOD PEOPLE OF ENUGU- Henry Nnanna Okeke, Esq. S.A to the Governor.

ENUGU TAX RELIEF : A GOOD ECONOMIC PACKAGE FOR NDI ENUGU.

26/6/2020.

Introduction.

According to Investopedia, "Tax Relief is any government program or policy initiative that is designed to reduce the amount of taxes paid by individuals or businesses. It may be a universal tax cut or a targeted program that benefits a specific group of taxpayers or bolsters a particular goal of the government". Recently, the Enugu State Government under the people friendly Leadership of Governor Ifeanyi Ugwuanyi announced Tax Relief for TaxPayers in the State as part of the State Government efforts towards economic recovery from the novel Coronavirus Pandemic. The Tax Relief package covers Personal Income Tax,  PAYE , Capital Gains Tax, Land Use Charge , etc. The economic implications of the Tax Relief package is indicative of the fact that the Government of Enugu State is the most Tax-Friendly in Nigeria and investors are welcome to Enugu.   It is imperative to note that Governor Ifeanyi Ugwuanyi upon assumption of office in 2015 , waived the payment of Personal Income Tax as well as Market Tax, for all traders in the major markets of the state”. That waiver is still invoke even as more Tax  Relief package are introduced to help businesses in Enugu State survive the impact Covid-19. 

 *ECONOMIC IMPLICATIONS OF THE TAX RELIEF* 

As a destination for investment, Enugu State Government is providing more Tax Relief to encourage economic activities in the coal City as follows :

 *Extension of Legal Timelines.* 

Companies and institutions in Enugu State have no reason to worry about the stipulated deadline for filling of their Annual Return. This implies automatic withdrawal of the penalties accruable to late payment. Thus, the   deadline for the submission of Form A for employees and Annual Returns in accordance with Section 41 (3) and 81 (1-3) of the Personal Income Tax Act (PITA) 2011 as amended for companies and institutions operating in Enugu State has been extended for good. Normally, the Annual Returns (form H1) is to be submitted by 31st day of January of every year by every employer to enable the tax authority ascertain whether the correct deductions and payments of tax have been made for the previous year (period of twelve months) for all its employees and for incomes from all sources earned during the year. 

Being fully aware of the fact that 50 percent of hospitality industry in the South East are situated in the Coal City, the Governor of Enugu State declared 50 per cent discount to all Personal Income Tax Assessment issued to owners of  Hotels for Year 2020. This Tax Relief is also extended to Schools considering the obvious fact that Enugu State is home for so many Schools. 

Furthermore, the PAYE   policy is also reviewed to reduce economic burden on investors and taxpayers in Enugu State. In this regard, waiver of penalty and interest charged for late remittance of Pay As You Earn (PAYE) deductions have been granted from January to December 2020 for all sectors. This is a great economic relief package by the Governor Ifeanyi Ugwuanyi administration.  

Enugu State Government also announced 50% discount on all assessed Capital Gains Tax (CGT) from now till December 2020.  Usually, Capital Gains Tax accrues on an yearly basis. It pertains to all gains accruing to a taxpayer - individual or company from the sale or lease or other transfer of proprietary rights in a chargeable interest which are subject to a capital gains tax of 10%.  

For investors in Real Estate, the Tax Relief package of the Enugu State Government implies automatic 50 per cent discount of all assessed Land Use Charge payment for Year 2020. 

A waiver of penalty and interest on Land Use Charge for Years 2018 and 2019 once payment is made before December 2020 is also invoke. 

With all these lower income tax rates, investors in Enugu State would keep more of their gross income, so effectively they have more money to spend. Therefore,  higher economic growth is anticipated even in the face of Covid-19 pandemic. 

In conclusion,  while there is no doubt that tax policy can influence economic choices, it is by no means obvious, on an ex ante basis, that tax rate cuts will ultimately lead to a larger economic development and recovery amid Covid-19 pandemic.

Basically, reductions in income tax rates affect the behavior of individuals and businesses through both income and 

substitution effects.  

Enugu State is in the hands of God. 

 Henry Nnanna Okeke, Esq

Special Assistant to the Governor of Enugu State.