The Nigeria Labour Congress (NLC) has asked the federal government to halt its plans to reintroduce excise tax on locally produced non-alcoholic and carbonated drinks.
This is as the labour union has warned that the beverage sub-sector will be losing sales revenue of about N1.9 trillion as well as Company Income Tax, VAT and Tertiary Education Tax of N197 billion as against the total projected receipts of N81 billion to government.
This disclosure was contained in a statement signed by the NLC President, Mr Ayuba Wabba, on Friday in Abuja, which was made available to the press.
NLC, who asked the National Assembly to urgently amend the sections of the Finance Act which re-introduced excise duties on non-alcoholic and carbonated drinks, said that implementing the increased taxes will impose more hardship on Nigerians as well as possibly lead to loss of 1.5 million jobs.
It cautioned the federal government not to allow the current situation to degenerate into a breakdown in industrial relations in the sector and generally in the country, noting that the food and beverage sub-sector has generated the coffers of government N202 billion as VAT in the past 5 years.
What the NLC is saying in the statement
The statement from NLC partly reads: “On the 31st of December 2021, President Muhammadu Buhari signed into law the Finance Act. Some of the provisions of the Finance Act include the imposition of excise duties on locally produced non-alcoholic, carbonated, and sugary drinks.
‘’The reason offered by government for this decision was to discourage the consumption of sugar by Nigerians as it has led to an upsurge in obesity and diabetes. In a letter dated 27th November 2021, the Nigeria Labour Congress wrote to the President and Commander-in-Chief of the Armed Forces of Nigeria, President Muhammadu Buhari, GCFR and the leadership of the two chambers of the National Assembly pleading that government should suspend the implementation of the excise duties on non-alcoholic, carbonated and sugary drinks.
‘’The Congress provided a number of very cogent reasons why government should not go ahead with the decision to impose fresh taxes on soft drinks. One of the reasons was that the re-introduction of excise duties on non-alcoholic, carbonated and sugary drinks will impose immense hardship on ordinary Nigerians who easily keep hunger at bay with a bottle of soft drink and maybe a loaf of bread.
‘’Our concern is the mass hunger that would result from the slightest increase in the retail price of soft drinks owing to the imposition of excise duties as it would be priced beyond the reach of many Nigerians. Congress was also alerted by the complaint of manufacturers of soft drinks in Nigeria that the re-introduction of excise duties would lead to very sharp decline in sales, forced reduction in production capacity, and a certain roll back in investments with the certainty of job losses and possibly shut down of manufacturing plants.
‘’With 38% of the entire manufacturing output in Nigeria and 22.5% share representation of the entire manufacturing sector in Nigeria, the food and beverage industry is the largest industrial sub-sector in our country. The food and beverage sub-sector has generated to the coffers of government N202 billion as VAT in the past five years, N7.3 billion as Corporate Social Responsibility and has created 1.5 million decent jobs both directly and indirectly.
‘’The appeal to rescind the re-introduction of excise duties on non-alcoholic drinks becomes even more compelling when the projected immediate revenue expected from the policy is weighed against the potential long-term loss to both manufacturers and government. The beverage sub-sector will lose 40% of its current sales revenue.
‘’This translates to a loss of N1.9 trillion. While the government will only make total projected receipts of N81 billion from the proposed reintroduction of the excise duties. Government also stands to will lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of expected downturn in overall industry performance should the excise duties be effected as being planned.
‘’In light of the foregoing, we ask the National Assembly to quickly amend the sections of the Finance Act that re-introduced excise duties on non-alcoholic and carbonated drinks. We also ask government to extend COVID-19 palliatives and support incentives to the Food and Beverages industry to cushion the shock and haemorrhage that the industry is trying to recover from.
‘’Finally, we demand that Government should engage Employers in the subsector and Organized Labour in sincere discussions on other options that can deliver a mutually satisfying win-win solution to this issue. We hope that the current situation will not be allowed to degenerate into a breakdown in industrial relations in the sector and generally in the country.’’
In case you missed it
Recall that a few days ago, during the public presentation and breakdown of the 2022 budget, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the introduction of excise duty of N10 per litre on all non-alcoholic, carbonated and sweetened beverages in the country.
The charge is part of a new policy introduced in the Finance Act which was signed into law by President Muhammadu Buhari on December 31, 2021, alongside the 2022 Appropriation Bill.