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Economy & Politics

Federal Government increases excise tax on alcohol and cigarettes

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In a press statement released today, Minister of Finance Kemi Adeosun has announced an increase in the excise duty rates for alcoholic beverages and tobacco with effect from June 4, 2018. Manufacturers have thus being given a three-month grace period. The increase in taxes will be phased from now till 2020. An excise duty tax is a tax charged on goods produced within a country.

Reasons behind the increase

Adeosun hinged the increase on the need to increase government revenue and combat the risks associated with alcohol and cigarette abuse.
The new excise duty regimes, according to her are in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislation on excise duties, as well as recommendations by the International Monetary Fund (IMF) and World Bank.

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The new taxes

A stick cigarette will attract a ₦1 specific rate per stick (₦20 per pack of 20 sticks) in 2018, a ₦2 specific rate per stick (₦40 per pack of 20 sticks) in 2019 and ₦2.90k specific rate per stick (₦58 per pack of 20 sticks) in 2020.The current ad valorem tax of 20% on cigarettes will, however, remain in place.

Beer & Stout would attract ₦0.30 per centilitre (Cl) in 2018 and ₦0.35 per Cl each in 2019 and 2020.

Wines would attract ₦1.25 per Cl in 2018 and ₦1.50 per Cl each in 2019 and 2020, while ₦1.50 per Cl was approved for Spirits in 2018, ₦1.75 per Cl in 2019 and ₦2.00 per Cl in 2020.The ad valorem tax on alcoholic beverages has however been removed.

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What the data says

Data from the National Bureau of Statistics reveal Nigeria’s beverage and tobacco imports were N64.9 billion in 2017 up from N49 billion in 2016. Nigeria’s tobacco export was N8.9 billion in the 4th quarter of 2017 alone. However, within Africa, Nigeria’s mainly exports tobacco to Ivory Coast, Benin Republic and Burkina Faso. Total African exports were about N2.3 billion.

Why it matters?

Nigeria is considered a manufacturing hub for tobacco and alcoholic products in Africa. Most of the newly setup tobacco plants are strategically located in Nigeria to help facilitate exports to smaller neighbouring African countries. Critics suggest this new tax could affect future investments in the tobacco sector. Nairametrics intel suggests about 21 billion sticks of cigarettes are produced annually in Nigeria.

 

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Patricia

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

1 Comment

1 Comment

  1. dumson23

    March 12, 2018 at 12:54 am

    Kalamity kemi narrow minded view of what the ministry of Finance is and should be.

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Economy & Politics

Seyi Makinde Proposes N3 billion investment plan for water supply

The local governments in Oyo are advised to submit a list of 10 faulty boreholes in the LG. 

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Seyi Makinde Proposes N3 Billion plan for water supply

The Governor of Oyo State, Seyi Makinde announced the proposal of a N3 billion investment plan dedicated to water supply in rural and urban areas of the state.

Speaking through the Chairman of Rural Water Supply and Sanitation Agency (RUWASSA), Mr. Najeem Omirinde in Ibadan on Monday, he added that N500 million of the N3 billion would be used for repairing broken and faulty state-owned boreholes.

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READ MORE: Network operators accept government’s ‘shared facility arrangement’ that limits financial risk 

All Chairmen of each of the Local Governments in Oyo are advised to submit a list of 10 faulty boreholes in the Local governments.

The Oyo State governor, Seyi Makinde also ordered that all new boreholes must be compliant with solar-powered pumps, to enable their longevity and save costs.

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READ ALSO: Diageo to invest $219 million in renewable energy in Nigeria, six others

Urging residents to patronize the agency if they need to dig up boreholes for water, citing that it would be cheaper if done through the state agency than with private drilling companies.

Minister of Finance, Zainab Ahmed stated last year that Nigeria needs an estimated N36 trillion annually for the next 30 years to solve Nigeria’s infrastructure problem. The investment, although a tiny fraction of what Nigeria needs is a bold step by the Oyo State government.

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Patricia
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Economy & Politics

FG asks UK court for more time to appeal $9.6 billion arbitration judgement

Malami stated that the Evidence of P&ID’s highly orchestrated scam had only recently come to light. 

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FG asks UK court for more time to appeal $9.6 billion arbitration judgement

The Federal Government has approached a UK court to appeal for more time to appeal the $9.6 billion arbitration award against it over the breach of contract with Process & Industrial Development (P&ID) Ltd.

Nigeria has said that it needs more time to pursue its argument that the 2010 gas supply contract with Process & Industrial Development Ltd was a sham.

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The legal dispute with P&ID is coming against the backdrop of the huge drop in the country’s revenue due to the collapse in oil prices globally. Nigeria had applied to US courts in March seeking for documents from 10 banks which includes Citigroup Inc. and JPMorgan Chase & Co, in a bid to prove its corruption allegations.

READ MORE: Signing AfCTA agreement; Our concerns for Nigeria by CSL Stockbrokers

P&ID, however, has denied any wrongdoing in the whole transaction, arguing that Nigeria missed its opportunity to appeal.

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The Nigerian Lawyer, Mark Howard, on Monday, the first morning of a 2-day hearing, said ‘’It is very unusual in a fraud case to discover a single smoking gun. By its very nature, fraud is conducted in secret, which makes it hard to detect and justifies an extension.’

READ MORE: The effect of the United States’ Shale Oil on Nigeria?

The legal representatives for Nigeria are seeking another hearing for the judge to decide whether any misconduct has taken place and whether it justifies overturning the contract

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The Attorney General and Minister for Justice, Abubakar Malami in a statement said, ‘’Evidence of P&ID’s highly orchestrated scam had only recently come to light.’’

It can be recalled that last year, a UK judge upheld an earlier arbitration award to P&ID, which had accumulated to about $9.6 billion. The arbitration decision was over a failed contract to build a gas processing plant in the Southern city of Calabar.

READ MORE: Respite for Nigeria as Exxon Mobil and Shell lose $1.8 billion arbitration award  

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The Nigerian lawyers disclosed that they have uncovered alleged bribes to government officials and their family members dating back to 2009.

Malami in his court filing on March 24, submitted that ‘’There is good reason to believe that ministers at the highest level were involved in a corrupt scheme to steal money from Nigeria.’’

 

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Economy & Politics

Delay in passing PIB creating uncertainties in Petroleum Industry – WEIN 

Ogbue said the bill will ensure a new future of legislation in the sector.

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Delay in passing PIB creating uncertainties in Petroleum Industry - WEIN 

The President of the Women in Energy Network (WEIN),  Mrs Funmi Ogbue, announced on Monday that the delaying the passage of the Petroleum Industry Bill (PIB) has led to uncertainties in Nigeria’s Oil and gas industry. 

She said that the current sector framework is ineffective, citing regulatory overlaps in responsibilities, according to NAN. She said, “The expedient passage of and purposeful implementation of the PIB is critical to addressing most of the loopholes in the management and governance of the sector. 

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“The PIB when passed into law will improve governance of the sector by strengthening institutions in the areas of clarity of structures, roles, accountability, transparency, and overall efficiency and effectiveness.”

READ ALSO: How Geregu Power became one of the best performing power plants in Nigeria – Akin Akinfemiwa

She added that passing of the bill will ensure a new future of legislation in the sector.  She urged the National Assembly to apply regulatory oversight on the necessary agencies and impact policies that affect the deregulation of the downstream sector that support women. 

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“WIEN will be willing to support the NASS in this review and also in proffering practical strategies and programmes that can improve these programmes and others that can improve the lives and livelihoods of poor women,” she said. 

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It will be recalled that the Minister of State for Petroleum Resources, Chief Timipre Sylva has said that the PIB currently with the Executive will be sent to the National Assembly in two weeks time. 

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Mrs Ogbue called for more women to be involved in the sector, especially in board and leadership positions of the MDA’s in the oil and gas sector, and said her organization lobbies for gender equality in the Petroleum Industry. 

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