- Says govt must consider all stakeholders and consumers
By Cliffsimon Akalonu
Speaking during a “One Day Business Discourse” in Lagos recently, the convener Mr. Kingsley Anaroke, who is also the CEO/Edito-in-Chief, MMS Plus Newspaper; Said He is delighted to have all stakeholders in this year’s edition of MMS Plus Business Discourse, aimed at x-raying the proposed Excise Duty regime for non- alcoholic beverages.
He said, We have a duty as a media house to set an agenda for national discourse and give direction for better policy formulation because we are not isolated from the vagaries of the Nigeria’s economy and the market dynamics.
Mr. Kingsley explained that ” X-raying the Proposed Excise Duty Regime for non Alcoholic Beverages in a Recovering Economy” is because issues around it have been taking place in quick successions without exhaustive consultations with the stakeholders and industry players.
He said that this has been a major flaw of policy making in Nigeria, where policy implementation takes effect immediately on conception without planning or consideration to Summersault effect.
He also advised Federal Ministry of Budget and National Planning, not to be so fast in mentioning January 2022 for commencement stating that laws are not made in the absent of the people, as well being of citizens and those operating in it must be considered.
With the reintroduction of excise duty on non alcoholic beverages, including VAT already suffering on services, will increase revenue into government coffers in the face of the tottering economy that compel Government to seek funds to advance its hybrid infrastructural and social intervention programmes aimed at fast tracking the recovery of economy ravaged by COVID-19.
It is of note that the organized private sector thinks that the timing is not appropriate as manufacturers are burdened with myriad of macro-economic challenges and structural constraints with huge negative effect on capacity utilization, productivity and competitiveness.
The Editor-in-Chief, MMS Plus Newspaper, asked; How competitive could the Nigerian products be with Excise Duty under AfCFTA? Should government insist on the Excise Duty collection despite the complaints of economic challenges? What is the most appropriate percentage figure to be adopted for collection if considered imperative? What are the implications of the collection or otherwise on the real sector and the economy in the short, medium and long terms? Is Excise Duty chargeable on both import and local production? What are the health and environmental implications of the unregulated (non-excise duty regime ?
Responding, the representative of Comptroller General of Custom, MA Shaahu; said, In march 2018, the federal government of Nigeria in line with ECOWAS directive to member — states approved a three year increment plan on Excise Duty.
The increase affected both the rate and the bases for levying Excise Duty — the specific rate of duty and the advelorem rate, Whereas beer will pay a specific rate of N 35 per liter under this new regime; other alcoholic beverages will pay both specific rate of 50 per litre as well as advelorem rate of 20% on the value of the product and in Finance Act of year 2020, it seeks to include the non — alcoholic drinks to pay Excise Duty considering the health hazards associated with it.
Given the lesson learnt from the impact of covid 19 and its effects; Custom Boss, said 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 non alcoholic drinks under Excise control this time will raise government revenue, reduce health hazards and align Nigeria with harmonization of the ECOWAS member – states.
She noted that there will be possible price hike which will affect the final consumers. However, It is also worthy of note that nothing good comes easy. There must be a price to pay, if we must steer the wheel of the economy of the country in right direction.
During a panel session of the one day discourse, Mr. Fred Chiazor who represented the President, Manufacturers Association of Nigeria (MAN), Said that COVID-19 pandemic challenges, industries faced continued pressure on demand, production and revenues as Many manufacturing jobs are on-site and supply chains are being disrupted, even that consumers reduce spending.
He said, Manufacturers are grappling with many challenges such as forex restrictions and currency devaluation. There is real concern that the industry cannot cope with persistent tax increases noting that, excise duty was increased on alcoholic beverages in 2018 with VAT increased in 2020″. There have been multiple tax increases in recent times. He said “.
MAN also cautioned that Nigeria does not have a sugar problem even as data indicates that Nigeria’s per capita sugar consumption in 2019 is about 8 kilograms, much lower than the global average of approximately 36 kilograms per person and up to 90kg/person in UK and America.
Nigeria hence, need to be critically evaluated to avoid impacting the most vulnerable people who do not have purchasing power.
Impact on the Economy, Introducing excise on non-alcoholic beverages is likely to cause a 0.43% contraction in output and about 40% drop in total industry revenues in the next five years, MAN said”.
Including Excise duty will significantly increase prices of products, which will lead to upsurge in illicit trade and counterfeiting due to substitution effect, Galloping inflation, occasioning increase in cost of raw materials and overall operating cost, Forex shortages, Severe Job Losses due to closure of companies unable to meet up.
MAN said, the beverage sub-sector of the food and beverage sector will lose up to NGN1.9trn in sales revenue between 2022 – 2025 indicating a 39.5% loss due to imposition of the new taxes with concomitant impact on jobs and supply chain businesses.
MAN also said that Re-introducing excise duty would be counter-productive to the Federal Government’s Sugar Master Plan The sugar industry would be hard hit when volumes plummet as a result of excise.
Also Speaking in Lagos, the National President of Water Producers of Nigeria (WAPAN), Mr. Mackson Egberi, who frowned at the Federal government of Nigeria and Buhari led administration of boycotting the poor masses in policy making thereby, not minding if companies and individuals die or suffer.
He cried that it is painful that the government leverage on the people instead of the people leveraging on the government. In other countries of the world hit by covid19 is currently receiving incentives and palliatives measures to fall back to business but Nigeria chooses to task her own citizens.
He also used the opportunity to pleade with the general public to accept what ever be the price of a bottle and sachet of water if the mistake is not corrected now, because the materials we used in production is not locally manufactured but sourced abroad.
He also directed that if Federal government is concerned at the health benefit of its citizens, then it should fix its health sector and stop imposing tariff on businesses of people, stating, that it is a shame for a government to make a law and within a year you come back to amend it” .
In a brief remark, Dr. Ikenna Nwosu, CEO, Cobita Investment Ltd, advised that Federal government of Nigeria should suspend the planned re-introduction of excise duty on non alcoholic beverages in 2022 and review in 2023 while working with the industry to carry out an in-depth impact assessment fashioning out the best approach that drives value for all stakeholders.
He also advised that federal government should also consider proper public awareness and enlightenment when coming up with a new policy stating that before now what has been in place to harmonize and put manufacturers into production?
The government could lose up to NG197bn in VAT, EIT and CIT revenues occasioned by drop in industry performance Mr. Ikenna said.
At the ” One-Day Business Discourse” in Lagos recently by stakeholders, three notch approach were adopted: Federal Government should Defer and Engage key industry stakeholders extensively.
Secondly, To Consider other strategies, Enforce and improve collections of existing taxes.
Thirdly, Reassess the need to allow a period to assess the effectiveness of the strategies and review the need for introduction of excise.
In attendance are: Ports Consultative Council (PCC), Nigeria Custom, Nigeria Shippers Council, MAN, LCCI, Association of Table Water Producers of Nigeria (ATWAP), Nigeria Economic Summit Group (NESG), Water Producers Association of Nigeria (WAPAN), National Action Committee (NAC) on AFCFTA and others.