‘Proposed excise duty on any manufacturing segment, ill-timed’
Members of the Organised Private Sector (OPS) have urged the National Assembly and the Federal Ministry of Finance to suspend plans to impose excise duty on any segment of the Nigerian manufacturing sector.
Specifically, they raised concerns about the proposed re-introduction of excise duty on the production of soft drinks in the country
Economist and Private Sector Advocate, Dr Muda Yusuf, stated that the proposal was also a negation of the economic recovery and job creation objectives of the federal government and detrimental to the job creation and poverty reduction commitments of President Muhammadu Buhari.
Yusuf, a former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), described the move as ill-timed, inappropriate and detrimental to the growth of the manufacturing sector.
According to him, Nigerian manufacturing companies, and indeed most investors, are going through tremendous stress at the moment, with many currently grappling with serious macro-economic challenges and structural constraints impacting on capacity utilisation, productivity and competitiveness.
He added that the implication of the challenges is affecting sales, turnover, profitability, shareholder value and the sustainability of investments, noting that the norm globally at this time, is to provide incentives for industries to aid their recovery from the shocks of the pandemic and escalating costs.
The Comptroller-General of the Nigeria Customs Service (NCS), Col. Hameed Ali (rtd), had at the 2022–2024 Medium Term Expenditure Framework (MTEF), proposed the introduction of excise duty on soft drink production in the country.
Yusuf stressed that the economy was still in a recovery phase, with many manufacturing companies yet to recover from the shocks and dislocations inflicted by the pandemic and the recession that followed.
He noted that the manufacturing sector offered a good platform for the laudable aspirations of President Buhari to create jobs and lift people out of poverty.
He however, noted that if the burden of tax became excessive and unbearable on the sector, the achievement of job creation and alleviation of poverty promised by the president would be difficult to achieve.
“Manufacturing contribution to Gross Domestic Product is still less than 10 per cent and the growth recorded in the sector in the second quarter of 2021 was a mere three per cent.
“It is worthy of note that manufacturers are already paying numerous taxes and levies which puts a lot of pressure on them.
“Some of the taxes and levies that are already being paid include: corporate income tax of 30 per cent, education levies of two per cent, Value Added Tax (VAT) 7.5 per cent, withholding tax, land rent, environmental tax and numerous unofficial taxes imposed by touts and area boys.
“There are also issues of extortions as a result of the checkpoints around the country, multitude of fees and levies imposed by many other government agencies at the Federal, State, and Local Government levels.
“Given the strategic importance of manufacturing to an economy, what the sector needs at this time is more stimuli to ensure better contribution to the GDP,” he said.