Business

Sunak to cut tax on banks to keep City competitive, say reports

Sunak to cut tax on banks to keep City competitive, say reports

Rishi Sunak is preparing to announce a tax cut for Britain’s biggest banks at next week’s budget to maintain the competitiveness of the City of London after Brexit, according to reports, despite plans to raise taxes on workers.

Ahead of the setpiece budget and spending review next week, the Financial Times said the chancellor planned to slash the corporation tax surcharge imposed on the banking industry by more than 60%, taking the levy from its current level of 8% to just 3% from April 2023.

The development comes after Sunak had warned the Conservative party conference this month that the time for tax cuts would need to wait until the public finances were back on a sustainable footing, amid record levels of government borrowing incurred during the Covid-19 pandemic.

Since the start of 2021, the chancellor has announced plans to raise taxes by £36bn a year – a bigger rise than at any budget since the mid-1970s – including plans to raise national insurance taxes on workers and businesses.

It also comes after the government slashed universal credit benefits from early October by more than £1,000 a year in the biggest overnight cut for social security benefits, in a development poverty campaigners warn would push more households into distress amid an unfolding cost of living crisis this autumn.

The chancellor announced a review of the banking industry surcharge at the spring budget, saying a planned increase in the main rate of corporation tax could put London at a disadvantage to other big financial centres such as New York and Hong Kong.

Corporation tax is set to rise from 19% to 25% from April 2023, which the Treasury said at the March budget “would make UK taxation of banks uncompetitive and damage one of the UK’s key exports”.

It comes amid concerns over the impact of Brexit on the City of London as large amounts of financial business continue to steadily drift to European financial centres, as well as to Asia and the US. Earlier this year, it emerged Amsterdam had overtaken London as Europe’s top share trading hub, raising questions over the future of the City and its contribution to the wider UK economy and the British exchequer.

The chancellor’s critics leapt on Sunak’s comments to the Tory party conference earlier this month, amid anticipation for a tough tax and spending settlement elsewhere at next week’s budget.

John McDonnell, the former shadow chancellor, said: “Sunak talked about morality in his conference speech, where’s the morality in cutting universal credit forcing more children into poverty whilst reducing the taxes on wealthy banks? Appalling judgment.”

Despite improvements over the past year as the economy recovers from Covid, the government is still on track to borrow £180bn in the current financial year, or about 7.7% of national income. Since the second world war, such a level has only been reached during the financial crisis and last year.

The banking surcharge was introduced by George Osborne in 2015 with the aim of ensuring a fair contribution from the banking industry after the then chancellor scaled back a separate levy on lenders’ balance sheets, and cut corporation tax for other firms to among the lowest levels in the western world. The levy raised £1.5bn in 2019.

Against the backdrop of heavy lobbying from the sector, Sunak dropped a heavy hint in his Mansion House speech in July that a fresh settlement was likely, saying that his ongoing conversations with banks had “only reinforced my view that the combined tax rate on UK banking profits should not increase significantly from its current level”.

A Treasury spokesperson said: “We do not comment on fiscal policy outside of budget.”

Business

NNPC refineries may never work again – Dangote

The President of Dangote Group, Alhaji Aliko Dangote, has stated that Nigeria’s state-owned refineries in Port Harcourt, Warri, and Kaduna may never function properly again, despite the reported $18 billion spent on their rehabilitation.

Speaking while hosting members of Global CEO Africa at the Dangote Petroleum Refinery, Dangote revealed that his decision to construct the 650,000-barrel-per-day facility followed the late President Umar Musa Yar’Adua’s administration’s refusal to sell the refineries to him.

According to Dangote, he and other investors had acquired the refineries in January 2007 but were compelled to return them to government ownership after a change in administration. He observed that despite significant subsequent investment, the refineries have remained inoperative.

“The refineries we bought before, which were owned by Nigeria, were producing about 22 per cent of PMS. We bought them in January 2007 but had to return them due to a change in government. The managing director at that time convinced Yar’Adua that the refineries would work,” he said.

“As of today, they have spent about $18 billion on those refineries, and they are still not working. I doubt very much if they will ever work,” he added.

Dangote likened the rehabilitation efforts to attempting to upgrade a 40-year-old car with modern technology, suggesting that even a new engine would not be compatible with the outdated framework.

Former President Olusegun Obasanjo had earlier expressed similar misgivings. In a previous interview, he asserted that the NNPC knew it was incapable of effectively operating the refineries but actively blocked private sector involvement.

Obasanjo disclosed that Dangote and other investors had paid $750 million to acquire the refineries, only for the deal to be reversed by the Yar’Adua administration.

“I told Yar’Adua the refineries would not work. I said, ‘NNPC cannot do it.’ He said, ‘NNPC said they can.’ I told him, ‘When you want to sell them again, you won’t find anyone willing to pay even $200 million as scrap.’ And that is where we are today,” Obasanjo said.

He alleged that the failure to privatise the refineries was fuelled by entrenched corruption within the NNPC, and insisted that those responsible should be held accountable.

Obasanjo further claimed that over $2 billion had been spent on the refineries in recent years, with no tangible results.

“If anyone says the refineries are working, why are they now relying on Aliko Dangote? He will make his refinery work and deliver,” he said.

Business

Nigerian stock market hits historic N1.806trn gains

The Nigerian Stock Exchange, under Nigerian Exchange Group, NGX, Limited, recorded a historic milestone as investors gained N1.806 trillion in a single day.

This development follows a significant rise in the All-Share Index, ASI, which surged by 2,457.13 points, or 2.01 per cent, to close at 124,446.80, crossing the 124,000 mark for the first time, from its previous close of 121,989.67.

The market’s positive performance has been attributed to growing investor confidence in Nigeria’s equities market, bolstered by improved liquidity conditions and ongoing economic reforms.

Market capitalisation similarly rose by 2.35 per cent to settle at N78.726 trillion on Thursday, up from N76.970 trillion recorded on Wednesday.

Consequently, market breadth closed strongly positive, with 70 gainers and only 10 losers.

On the gainers’ table, FTN Cocoa rose by 10 per cent to end the session at N6.82, while UPDC also gained 10 per cent, closing at N4.62 per share.

United Bank for Africa, UBA, soared by 10 per cent to settle at N39.60, while Consolidated Hallmark Holdings similarly rose by 10 per cent to close at N3.30 per share.

Haldane McCall also gained 10 per cent, ending the session at N4.73 per share.

Conversely, Neimeth International Pharmaceutical declined by 9.91 per cent, finishing at N9, while Legend Internet shed 9.88 per cent to settle at N7.21 per share.

Industrial and Medical Gases dropped by 7.36 per cent to close at N34, and Cadbury Nigeria fell by 6.22 per cent, ending the day at N55 per share.

Similarly, Livestock Feeds lost 5.67 per cent, closing at N9.15 per share.

In terms of market activity, 1.3 billion shares valued at N27.73 billion were exchanged across 27,875 transactions.

This compares to 888.70 million shares worth N15.609 billion traded in 24,303 transactions on Wednesday.

Leading the activity chart was Access Corporation, with 174.22 million shares valued at N3.99 billion.

AIICO Insurance followed with 81.96 million shares worth N165 million, while Ja Paul Gold recorded 74.01 million shares traded, valued at N245.2 million.

UBA exchanged 64.51 million shares worth N2.52 billion, and First City Monument Bank traded 63.3 million shares valued at N585.75 million.

Business

NAFDAC uncovers expired chemicals, additives, seals warehouses

The National Agency for Food and Drug Administration and Control (NAFDAC) has uncovered a massive illegal operation involving the sale of fake chemicals, expired food flavours, unauthorised fertilisers, and repackaged pharmaceutical raw materials in the Alapere area of Ketu, Lagos.

The agency, in a statement, disclosed that the operation led to the arrest of several suspects and the sealing of three warehouses filled with dangerous substances.

NAFDAC Director of Investigation and Enforcement, Martins Iluyomade, told journalists that the raid followed credible intelligence about a criminal network engaged in large-scale food and chemical counterfeiting.

Iluyomade described the agency’s action as its campaign carried out to protect the health of Nigerians, stressing that individuals posing as legitimate business operators while engaging in activities that seriously endanger public health.

According to him, the offence was the sale and repackaging of expired chemicals, some of which were dangerously redirected for use in food and drug production.

He explained that several controlled substances and high-risk materials, including fertilisers requiring special clearance from the National Security Adviser, were found stocked without any authorisation.