The Centre for the Promotion of Private Enterprise (CPPE) has called for the halt of the planned imposition of excise duties on manufacturers. This was disclosed by Dr. Muda Yusuf, CEO of CPPE in a document titled, “CPPE calls for suspension of planned imposition of excise duties on manufacturers”
Yusuf claimed that the Finance Minister, Mrs Zainab Ahmed, warned earlier this year that excise duty would be levied on a variety of manufactured commodities in the country soon.
He, however, argued that manufacturers are already facing extremely difficult times as a result of growing energy costs, rising operational expenditures, severe currency depreciation, forex market illiquidity, galloping inflation, and various structural impediments.
What the CPPE is saying
He stated that the manufacturing sector which faces a lot of bottlenecks should be supported rather than distorted with more taxes.
- “They are also experiencing significant spikes in the cost of raw materials, cost of fund, high import duty, prohibitive cost of transportation and high cost of logistics. A huge proportion of these costs cannot be passed on to the consumers because of weak purchasing power and high consumer resistance. Given the strategic importance of manufacturing to the Nigerian economy, what the sector needs at this time is more stimulus, and not more taxes.”
He also commented on the energy crises facing the manufacturing sector in Nigeria.
- “The cost of diesel has risen by close to 200 percent in the past few weeks. It was at an average of N288 per litre in January this year and jumped to as high as N625 per litre in some locations. The cost of gas is similarly on the increase and there are also sharp increases in electricity tariffs.”
- Reacting to the foreign exchange crisis faced by manufacturers, Yusuf said, “Several manufacturers are not able to import vital raw materials because of forex scarcity, a situation which is severely inhibiting their production and productivity. Many are forced to source forex from the parallel market at exorbitant rates. Manufacturers are yet to recover from the shocks of the pandemic and the subsequent recession. “
He also stated that manufacturers are struggling with unfair competition, especially from products imported from Asia which have flooded the Nigerian market, largely because of the porosity of the borders. These imports are often much cheaper than goods produced locally.
He added that the cost of logistics has continued to be on the upward trend, driven largely by the state of the roads, the limited freight capacity of the railway system, the crisis at the major ports, the traffic gridlock around the Lagos ports and extortions in the logistics chain.
What you should know
- Nairametrics reported that the Federal Government announced the introduction of excise duty of N10 per litre on all non-alcoholic, carbonated and sweetened beverages in the country.
- The tax is part of a new policy enacted by President Muhammadu Buhari in the Finance Act, which was signed into law alongside the 2022 Appropriation Bill on December 31, 2021.
- The Nigeria Labour Congress (NLC) has asked the federal government to put an end to proposals to restore excise taxes on domestically made non-alcoholic and carbonated beverages.
- The beverage industry, according to the labour union, will lose N1.9 trillion in sales income, as well as N197 billion in Company Income Tax, VAT, and Tertiary Education Tax, compared to total estimated government receipts of N81 billion.