In a move designed to wean the state from its dependence on crude oil allocations and increase employment opportunities, the Kwara state government has granted a five year tax waiver for small and medium scale enterprises (SMEs) willing to do business in the state. The waiver will have several positive implications.
While the state may lose tax revenue from the SMEs in the short term, indigenes of the host communities where the SME operate will gain massively. The tax holidays will free up revenue for expansion, leading to increased job opportunities. An increase in hiring will lead to increased consumption of goods and services, leading to economic growth. The newly employed will also increase the tax base of the state. SMEs tend to provide basic amenities for the areas in which they operate thus increasing development.
Kwara state has one of the lowest FAAC allocations in the country. Data from the FAAC allocation for March 2017, shared in April 2017 show the state got N2.4 billion as its share, while Akwa Ibom got the highest allocation of N13.6 billion. Phillips Morris Limited, recently went into a partnership with International Tobacco Company, to produce cigarettes in the state. The drop in crude oil prices and production volumes lead to a fall in FAAC allocations. States and local governments were badly impacted, leading to some of them owing salaries. Incentives like the holiday, key into the Economic and Growth Recovery Plan (ERGP) launched few months back by the Federal Government.