Plan to raise excise on fizzy beverages is condemned by OPS and others

The Federal Ministry of Finance, Budget, and National Planning has proposed raising the excise tax on tobacco, liquor, and alcoholic and non-alcoholic beverages. The Organized Private Sector of Nigeria (OPSN) has expressed concern about the idea.

The body claimed it conflicts with the recently established 2022 Fiscal Policy Measures and Tariffs Amendments (FPM 2022), which covers 2022–2044. It described the proposed increase through the ministry’s tariff technical committee as another burden that shouldn’t be added to the already excessive list.

Adewale Oyerinde, a member of the OPS and the Director-General of the Nigeria Employers’ Consultative Association (NECA), denounced the action and claimed that businesses are still recovering from difficulties that pose a threat to their ability to produce and make a positive contribution to the development of the country.

He claimed that if excise taxes were raised in an unsustainable way, government revenue from the sector may actually decrease rather than rise.

“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 remembered that Nigeria’s non-oil sector has played a significant role in the country’s recent economic growth. He emphasized that more difficulty for the sector does not augur well for its future or for the rise of government income in 2023 and beyond.

He claimed that the economy’s present slow development was evidence that a significant tax increase would not produce the desired outcomes for all parties involved. He argued that the Fiscal Policy Measures and Tariff Amendments 2022 Roadmap should keep up its rate of growth.

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 head of NECA advised that initiatives that would reverse the meager economic progress accomplished thus far should be put on hold until efforts are made to restore industries to a sustainable level and raise the employment rate.

He called for the proposed rise to be halted and the maintenance of the status quo, which calls for no excise increase beyond what is outlined in the Fiscal Policy Measures for 2022 that the President earlier this year approved (the three-year roadmap which commenced on June 1, 2022). In order to reach an equitable agreement, he added, the government must continue its dialogue with the OPS.

In response to government concerns, Oyerinde stated that producers might also include disclaimers, as is now done in the tobacco sector, and that continual coordination with regulatory bodies with the purpose of monitoring the risk level of carbonated drinks could be sustained to prevent abuse.

Subscribe to our newsletter for latest news and updates. You can disable anytime.