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OPS condemns plan to increase excise on carbonated drinks, others

By Gloria Nwafor
11 October 2022   |   3:37 am
The Organised Private Sector of Nigeria (OPSN) has raised the alarm over a proposal by the Federal Ministry of Finance, Budget and National Planning to increase excise on tobacco, spirits, alcoholic and non-alcoholic beverages.

Director-General of NECA, Wale Oyerinde

The Organised Private Sector of Nigeria (OPSN) has raised the alarm over a proposal by the Federal Ministry of Finance, Budget and National Planning to increase excise on tobacco, spirits, alcoholic and non-alcoholic beverages.

The body, which described the planned increase through the ministry’s tariff technical committee as another burden too many, said it conflicts with the recently-established 2022 Fiscal Policy Measures and Tariffs Amendments (FPM 2022) which covers 2022-2024.

A member of the OPS and Director-General of Nigeria Employers’ Consultative Association (NECA), Adewale Oyerinde, who condemned the move, said businesses are still recovering from challenges that are threatening to incapacitate its productive capacity and contribution to national development.

He said a move to hike excise in an unsustainable manner could cause government revenue from the industry to significantly plunge rather than increase.

“Historically, huge increases in excise duty often do not translate to increased revenue in the medium to long term. The more sustainable an excise regime is, the better the industry can contribute to the government treasury,” he said.

Oyerinde also recalled that recent economic growth in Nigeria has been driven largely by the non-oil sector. He stressed that subjecting the sector to further hardship does not bode well for the future of the industry nor the growth of government revenue in 2023 and beyond.

He said the current minimal growth of the economy was an indication that a huge tax hike would not achieve the desired results for all stakeholders. He urged that the rate of increase in the roadmap of the Fiscal Policy Measures and Tariffs Amendments 2022 should be maintained.

According to him, “If another increase is imposed, the industry will suffer a further setback and more consumers may tilt toward purchases of products that are less expensive – typically those sourced from the illicit market on which no form of Nigerian Tax (including excise) has been paid.”

The NECA boss urged that while efforts are being made to get industries back to a sustainable level and drive up the employment rate, policies that could negate the little gains made so far in the economy should be suspended.

He urged that the proposed increase should be suspended and called for maintenance of the status quo of no excise increase – other than as prescribed in the 2022 Fiscal Policy Measures approved by the President earlier in the year (the three-year roadmap which commenced on June 1, 2022). He further stated that there is a need for the government to engage the OPS further on the matter for an amicable resolution.

While addressing government concerns, Oyerinde noted that the ongoing collaboration with regulatory agencies with the view of monitoring the risk level of carbonated drinks could be sustained to guard against abuse while producers could also state disclaimers as presently done in the tobacco industry.

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