The federal government has stopped the implementation of the N10 per litre excise duty on non-alcoholic beverages levied to discourage excessive sugar consumption and also create new revenue for the government from the manufacturing sector.
Equally, the proposed increase in the excise duty on beer, wines, spirits, and tobacco has been put on hold in the meantime.
Instead, the government will allow the excise regime runs its course from 2022 to 2024 as contained in the federal government roadmap unveiled in 2022.
The indication of this came at a meeting between Zainab Ahmed, Minister for Finance, Budget, and Planning and the delegation of the Manufacturers Association of Nigeria (MAN) led by its President, Francis Mesioye.
With the decision to drop the levy which would have led to losses in other taxes, a crash is then expected in the prices of alcoholic and non-alcoholic beverages which has since soared across the country.
The retail price of a bottle of Coca-Cola and that of Pepsi was N100 before the introduction of the N10 per litre levy in 2022. The two brands currently go for N200 each now.
The N10 per litre duty that plagued the productive sector since 2022, is a new sugar tax, imposed on all non-alcoholic and sweetened beverages to raise excise duty’s revenues for health-related and other critical expenditures in line with the 2022 budget priorities.
At the meeting that was also attended by Segun Ajayi-Kadir, the Director-General of MAN, the minister allayed the fears of the sector, assuring it of its commitment to the well-being of the industry.
Ajayi-Kadir noted that the minister told the delegation of the conclusion of the reconsideration of the finance act and also that the views of the group are considered in the soon-to-be-released 2023 fiscal policy guidelines.
“In specific terms, she assured us that the guidelines would not include the proposed increase in excise duty on beer, wines and spirit, tobacco, and non-alcoholic beverages in 2023 but rather allow the excise regime to run its full course from 2022 to 2024 as contained in the Road Map released by the federal government in 2022″, stated Ajayi-Kadir.
Also, the government seems to have come to an understanding with MAN on the introduction of a 0.5 per cent Import surcharge, which is meant to fulfil Nigeria’s obligations to the continental agreement in the implementation of the Africa Continental Free Trade Area (AfCFTA) agreement, as well as the promised intervention on resolving the logjams in the interpretation of the Tin Plate, HS Code 7210. 12.00.00 with the Nigeria Customs Service.
“From the foregoing, the Association views the Federal Government’s move as one that will encourage our members who are currently struggling with unprecedented low sales, forex squeeze, inadequate electricity supply, and multiple taxes and levies from the three tiers of government. This move will reassure members of the administration’s respect for stakeholder engagement and the usefulness of public-private sector dialogue”, the D-G stated.
The N10 per litre tax is seen by the government as a way to generate new revenue from a sector that contributed N946 billion in Value Added Tax (VAT) and Company Income Tax (CIT) in 2022.
A breakdown of the amount shows the sector contributed N157.53 billion in the first quarter; N293.48 billion in the second quarter; N253.31 billion in the third quarter and N90.4 billion in the fourth quarter.
Having projected N81 billion from the N10 per litre levy between 2021 and 2025, it was incorporated into the Finance Act 2021 which was signed into law with the 2022 Budget by the outgoing President Muhammadu Buhari.
Before now, MAN, through a series of advocacy, has warned of the implication of a new tax on carbonated drinks and others, urging the government to devise other means of generating revenue rather than inadvertently stifling the productive sector which is already sapped from setbacks occasioned by Naira scarcity, forex crunch, energy crisis, and infrastructure deficit.
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