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Manufacturers to lose N1.9t to new excise duty regime

By Sulaimon Salau
14 November 2021   |   2:32 am
The proposed introduction of excise duty collection on non-alcoholic drinks would see producers of the items lose up to NGN1.9 trillion in revenue between 2022 and 2025.

The proposed introduction of excise duty collection on non-alcoholic drinks would see producers of the items lose up to NGN1.9 trillion in revenue between 2022 and 2025.
   
Manufacturers Association of Nigeria (MAN) revealed this at MMS Plus Business Discourse on, ‘X-raying the Proposed Excise Duty Regime for Carbonated Beverages in a Recovering Economy.’ 
   
The Chairman of Fruit Juice Producers branch of MAN, Fred Chiazor, stated that the losses indicate a 39.5 per cent loss due to imposition of the new taxes with concomitant impact on jobs and supply chain businesses.

   
The group called for a suspension of the fiscal policy, even as it noted that the proposed excise duty collection would shrink the sector’s contribution to the GDP, which currently represents 35 per cent of manufacturing.
   
“Government could lose up to N197 billion in Value Added Tax (VAT), EIT fund and Collective Investment Trust (CIT) revenues occasioned by the drop in industry performance,” the MAN representative said.
   
He argued that the tough economic situation in the nation presently should see the government introduce fiscal palliatives and tax rebate instead of introducing excise duty collection.
 
Comptroller-General of Nigeria Customs Service (NCS), Hammed Ali stated that with the wide production and consumption of carbonated non-alcoholic drinks locally, there is a strong indication that it will trigger a significant revenue rise from excise duty when brought under excise control.
   
Ali, who was represented by the Controller, Lagos Industrial Command, Comptroller Monica Shaahu, noted that the policy would cushion the effects of the overdependence on oil import duty revenue.
   
“Given the lesson learnt from the impact of COVID-19 and its effects; many nations of the world have re-strategized their economical system in a more diversified way to achieve a robust, stable and prosperous economy with a long term benefit. Hence bringing carbonated drinks under Excise control this time will raise government revenue, reduce health hazards and align Nigeria with harmonisation of the ECOWAS member–states. For instance, Coca Cola, the largest conglomerate that produces carbonated drinks, pay Excise Duty in other host countries apart from Nigeria. This is unhealthy economic advantage for their products coming from other nearby countries.”

President of Water Producers Association of Nigeria (WAPAN), Mackson Odiri Egberi, argued that the move to collect excise duty on water would make the product go beyond the reach of ordinary citizens.
 
Mackson argued that the chemicals used by water producers as well as the sachets are imported and subjected to import duty payments, lamenting that excise duty collection would be an additional burden on producers that would force them to shut down or compromise on standards.
   
A member of the Nigerian Economic Summit Group (NESG), Dr. Ikenna Nwosu advised that the initiative be shelved for a minimum of one year to allow for robust discourse with industry stakeholders on the possible gains and shortcomings of the policy.