The Federal Government has been advised by the Manufacturers Association of Nigeria (MAN) not to go ahead with the proposed excise duty hike on alcoholic beverages and tobacco products in Nigeria, as doing so would portend negative implications for the Nigerian economy.
Dr Frank Jacobs, the President of MAN said this in Lagos yesterday while speaking to journalists. According to him, if the proposal is implemented, the firms producing the products may likely shut down and cause people to lose their jobs.
Jacobs further noted that his association is currently engaging in talks with the Federal Government on how best to resolve the issue.
During the last presidential engagement forum, I talked about the impact of this excise duty increase on the manufacturing sector. I made it clear that if they go ahead and implement that policy, within the three years when that policy will be in full force, many of the companies that are involved in those products must close shops.
Why the proposed increase in excise duty?
Recall that the Federal Government had on March 11th proposed to amend the excise tariff rates for alcoholic and tobacco products in the country. This proposal will take effect by June, and it is said to be in line with the Government’s bid to raise revenue.
Nigeria’s Finance Minister, Kemi Adeosun stated earlier in March that the proposed excise duty would be spread over three years in order to moderate its impact on the prices of the affected products.
She also explained that the new excise duty for alcoholic beverages and tobacco was proposed after deliberations between the Ministry of Finance, Tariff Technical Committee and other industry stakeholders.
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The manufacturing, importation, sale and consumption of alcoholic beverages/tobacco products in Nigeria make up a significant percentage of all economic activities in the country. Companies such as Guinness, British American Tobacco Nigeria Limited, etc. contribute a significant portion of the manufacturing sub-sector in Nigeria. These companies also contribute significantly to the economy through income generation and employment of thousands of staff.
However, there have often been concerns surrounding the health implications of alcohol and tobacco in Nigerians, with many groups calling for such hikes in excise duties to be taken as a means of discouraging Nigerians from drinking and smoking. That notwithstanding, it is imperative that all these factors be taken into consideration when proposing to implement such a policy as has been proposed by the Federal Government.