Nigeria could become a dumping ground for cheap tobacco products unless the Federal Government urgently raises excise taxes to meet regional and global standards, stakeholders have warned.
They noted that the country’s weak tax regime not only fuels high tobacco use among young people but also deprives government of badly needed revenue while allowing multinational corporations to rake in excess profits.
The stakeholders made the observations at the validation workshop on the Tobacco Excise Tax Simulation (TETSiM) Report convened by Civil Society Legislative Advocacy Centre (CISLAC), in Abuja.
Speaking, executive director of CISLAC, Auwal Rafsanjani, lamented that despite progress since 2018 when Nigeria adopted a mixed excise tax regime, rates remain too low to influence consumption patterns.
He said Nigeria maintains one of the lowest tobacco tax rates in comparison with other West African countries, adding that with trade liberalisation, the country risks becoming a dumping ground for tobacco productsRafsanjani claimed that every kobo lost from low tobacco taxes is revenue forgone for development and profit siphoned abroad by multinational firms.
He said the Tobacco Excise Tax Simulation report provides policymakers with clear scenarios to guide decisions ahead of the expiry of the current regime in May 2025.
His words: “As expressed in Article 6 of the Framework Convention on Tobacco Control, price and tax measures are the most cost-effective measures for tobacco control. In recognition of this, the guidelines for the implementation of the Article spells out the best structure and system for effective tax regimes.
“These effective systems can drive down affordability, reduce initiation especially among children and youth. It can bring about reduced health and social externalities associated with tobacco use and exposure on the one hand, and increasing government revenue for development on the other hand.
While there is a variation in taxes that can be levied on tobacco, excise taxes have proven to be the most effective for demand reduction.
“As country, Nigeria has since 2018 began implementation of a tobacco tax regimes that adopts the Article 6 recommended structure. In addition to the already existing ad valorem excise tax system, Nigeria added specific tax system with direct charges on every stick or pack of cigarettes.
“Additionally, the tax policy adopts the uniformed tax structure across all brands with the aim to eliminate substitutes in consumption patterns. While these are very commendable progress, Nigeria has not done so well in imposing specific rates that are effective enough to inform consumption changes.”.
The CISLAC boss argued that when tax rates are too minimal, the industry with an already high margin of profit can easily absorb the burden without shifting to the final consumers.
“When this happens, tobacco products will remain very cheap, easily accessible to even children, and the prevalence of tobacco use will remain high. In comparison to other countries in West Africa, Nigeria maintains one of the lowest tobacco tax rates. With trade liberalization in the region, the country can easily become a dumping ground for tobacco products”, he warned.
He said CISLAC partnership with Tax Justice Network Africa (TJNA) in implementing the Tobacco Tax Advocacy in Africa project has achieved critical results in tobacco tax landscape in Nigeria.
Representative of the Ministry of Finance, Sarah Bwala, acknowledged the gaps, stressing that government is committed to revising excisable goods policy in line with the ECOWAS directive.
“This validation workshop comes at a critical time as Nigeria undertakes a comprehensive review. Our focus is not only on revenue generation but also on protecting public health,” she said.
Director of the Research Unit on the Economics of Excisable Products (REEP), University of Cape Town, Prof. Corne Walbeek, said tobacco kills half of its regular users, amounting to eight million deaths globally each year.
Warning that Nigeria’s current tax structure was very far off the standard, he said reducing tobacco use improves public health and, at the same time, raises government revenue.
He said “If you want to make a real difference to public health and the fiscal situation, go for a big tax increase. We recommend at least a 150 per cent hike in the first year, followed by 30–40 per cent increases. At the moment, Nigeria’s excise tax is just 30 per cent against the ECOWAS minimum of 50 per cent, while the specific tax per pack is only six to seven cents instead of 40 cents. That’s a huge gap,” he said.
Policy Officer at Tax Justice Network Africa (TJNA), John Thomi, countered claims by tobacco companies that higher taxes would cost job.
According to him, evidence shows reducing tobacco consumption makes populations healthier and redirects consumer spending to other sectors, sustaining jobs elsewhere.
“The scare tactic of job losses should not derail this critical reform,” he argued.
