Key highlights
- NECA says the new FPM will largely affect manufacturers, it also has the potential to disrupt the organised private sector’s value-chain
- They added the economy will be further hard-pressed to withstand the likely loss of jobs that will follow these increases
- Under the newly introduced taxes, the Federal Government will charge N75 per litre of beer, stout or wine imported into Nigeria.
The Nigeria Employers Consultative Association (NECA) has called on the Federal Government to suspend the tariff increase plan for the manufacturing sector.
They stated that FG’s 2023 Fiscal Policy Measures (FPM) seeks to increase taxes on excise duty on alcoholic beverages, cigarettes and tobacco products; the introduction of excise duty on single-use plastics and Import Adjustment Tax levy on vehicles of 2000 will be catastrophic for the manufacturing sector.
This was disclosed in a statement by its Director-General, Mr Adewale-Smatt Oyerinde, calling for reversing the 2023 Fiscal Policy Measures (FPM).
Reversal
NECA chief urged FG to revert to the 2022 FPM roadmap designed to lapse in 2024, as the new 2023 FPM includes increased excise duty on alcoholic beverages, cigarettes and tobacco products; introduction of excise duty on single-use plastics and Import Adjustment Tax levy on vehicles of 2000 cc and above.
The NECA boss added that the Nigerian manufacturing sector is not ready for the increased tariffs, he said:
- “While the government’s new FPM will largely affect manufacturers, it also has the potential to disrupt the organised private sector’s value chain with consequential effects on Nigerians as a whole.
- “While we understand the government’s revenue challenges, the proposed increases will spike production costs and reduce the competitiveness of Nigerian manufacturers in local and international markets.
- “With recent reports of unemployment rate hovering above 40 per cent, the economy will be further hard-pressed to withstand the likely loss of jobs that will follow these increases.’’
NECA added that the proposed increases could aggravate smuggling and stifle the growth of businesses in affected sectors, citing that it could also promote the production of fake products, reduce the purchasing power of Nigerians and ultimately reduce the government’s projected revenue across the board.
- “With more than 60 different taxes and levies currently being paid by businesses, the best that government can do is not to overburden the sector or cause relocation of many more to other climes.
- “With about 20 bills pending at the National Assembly with financial implications for businesses, the government will do well not to overburden the organised private sector.
- “The 2023 FMP, as proposed will neither promote economic growth nor achieve the long-term revenue projection of government.”
Backstory
The Federal Government introduced a new set of taxes on alcoholic beverages, imported vehicles and single-use plastics in its new tax regime.
The government also added to the list of items banned from being imported into the country with about a month to the end of President Muhammadu Buhari’s administration.
Under the newly introduced taxes, the Federal Government will charge N75 per litre of beer, stout or wine imported into Nigeria.
Also, additional taxes are to be levied on motor vehicles with a 2% new tax on 2-litre engine vehicles, while 4-litre engine vehicles will attract a 4% new tax.
This disclosure is contained in the new Fiscal Policy Measures (FPM) for 2023 in a Circular dated April 20, 2023, and signed by the Minister of Finance, Budget and National Planning, Zainab Ahmed.
