EXCISE DUTY ON DRINKS TO SQUEEZE MANUFACTURING SECTOR CONTRIBUTION TO GDP – MAN
The implementation of the planned excise duty collection on carbonated beverages will shrink the manufacturing sector’s contribution to the GDP, which currently stands at 35 percent, the Manufacturers Association of Nigeria (MAN), has predicted.
Fred Chiazor, chairman of the Fruit Juice Producers branch of MAN, who made the projection in Lagos recently during a business discourse tagged, ‘X-raying the Proposed Excise Duty Regime for Carbonated Beverages in a Recovering Economy,’ organized by MMS Plus Newspaper, said it will also increase the cost for manufacturers and force many to close shop.
According to him, the government could also lose up to N197 Billion in Value Added Tax (VAT), EIT fund, and Collective Investment Trust (CIT) revenues due to a drop in the performance of industries.
“The proposed introduction of excise duty collection on non-alcoholic drinks would see producers of the items lose up to N1.9 trillion in revenue sales between 2022 and 2025. This will be in addition to several job losses,” he said.
Chiazor however said that rather than introduce taxes and excises, the government should introduce fiscal palliatives and tax rebates to cushion the effect of the tough economic situation on businesses. Meanwhile, Hammed Ali (Rtd), comptroller-general of the Nigeria Customs Service (NCS), said that with the wide production and consumption of carbonated non-alcoholic drinks locally, there is a strong indication that it will yield significant revenue for the government.
Ali, who was represented by Monica Shaahu, the controller of Lagos Industrial Command, said that bringing the carbonated non-alcoholic and alcoholic drinks under excise control, will cushion the effects of the overdependence on oil revenue especially at this time of economic meltdown. Speaking on the ‘Merits and Demerits of Excise Duty in a COVID-19 Recovering Economy,’ Shaahu noted that the move will help to bring the health and environmental hazards presented by the production and consumption of carbonated drinks, under regulatory control.
“Excise traders under the new regime are likely to think of exportation to enjoy the duty-free delivery incentives from the Federal Government, thereby attracting more foreign exchange to the economy. Given the lesson learned from the impact of Covid-19, many nations have re-strategize their economic system in a more diversified way to achieve a robust, stable, and prosperous economy with a long-term benefit,” Shaahu said.
She, however, noted that in the short term, the new excise regime may present *temporary hardship to the excise traders that hitherto do not pay duties. On his part, Mackson Odiri Egberi, president of the Water Producers Association of Nigeria (WAPAN), said that the move to collect excise duty on water would see the product go beyond the reach of the masses.
Mackson said the chemicals used by water producers as well as the sachets are imported and subjected to import duty payments, pointing out that excise duty collection would be an additional burden on producers, which may force them to shut down or compromise standards. Emmanuel Jime, executive secretary of the Nigerian Shippers’ Council (NSC), said that the new excise duty regime would not affect Nigeria’s competitiveness with the African Continental Free Trade Agreement (AfCFTA).