The Manufacturers Association of Nigeria (MAN) has said the proposed re-introduction of Excise duty collection on non-alcoholic drinks will make producers of the items to lose up to N1.9 trillion in sales revenue.
The Chairman of Fruit Juice Producers branch of MAN, Mr. Fred Chiazor, announced this yesterday at the MMS Business Discourse in Lagos.
Chiazor, who discussed the theme: X-Raying the Proposed Excise Duty Regime for Carbonated Beverages in a Recovering Economy, said the loss in revenue sales would be incurred between 2022 and 2025.
The MAN chief noted that the amount indicated a 39.5 per cent loss due to imposition of the new taxes with concomitant impact on jobs and supply chain businesses.
He called for a suspension of the fiscal policy, even as the association noted that the proposed excise duty collection would shrink the sector’s contribution to the Gross Domestic Product (GDP) which currently represents 35 per cent of manufacturing.
“Government can lose up to N197 billion in Value Added Tax (VAT), EIT fund and Collective Investment Trust (CIT) revenues occasioned by the drop in industry performance,” Chiazor said.
He argued that the current tough economic situation in the nation should see the government introduce fiscal palliatives and tax rebates instead of introducing excise duty collection.
Also, the Comptroller General of the Nigeria Customs Service (NCS), Col. Hammed Ali (retd.), said the introduction would trigger a significant revenue rise from excise duty when brought under excise control.
The NCS boss said this was due to the wide production and consumption of the carbonated non-alcoholic drinks locally.
Ali, who was represented by the Controller of Lagos Industrial Command, Comptroller Monica Shaahu, presented a paper, titled: Merits and Demerits of Excise Duty in a COVID-19 Recovering Economy.
The Customs boss noted that bringing the carbonated non-alcoholic and alcoholic drinks under excise control would cushion the effects of the overdependence on oil/import duty revenue occasioned by global economic response to COVID-19.
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“Away from the revenue view, the health and environment hazards presented by the production and consumption of carbonated drinks will be ameliorated, bringing them under regulation and control.
“Excise traders under the new regime are likely to think of exportation to enjoy the duty free delivery incentives from the federal government, thereby attracting more foreign exchange (forex) to the economy.
“Given the lesson learnt from the impact of COVID-19 and its effects, many nations of the world have re-strategised their economies in a more diversified way to achieve a robust, stable and prosperous economy with a long-term benefit.
“Hence, bringing carbonated drinks under excise control this time will raise government revenue, reduce health hazards and align Nigeria with harmonisation of the ECOWAS member-states,” he said.
The President of Water Producers Association of Nigeria (WAPAN), Mr. Mackson Odiri Egberi, argued that the move to collect excise duty on water would see the product go beyond the reach of the ordinary citizens.
Egberi said the chemicals used by water producers as well as the sachets are imported and subjected to import duty payments.
He regretted that excise duty collection would be an additional burden on producers which would force them to shut down or compromise on their standards.
A member of the Nigerian Economic Summit Group (NESG), Dr. Ikenna Nwosu, advised that the initiative be shelved for a minimum of one year to allow for robust discourse with industry stakeholders on the possible gains and shortcomings of the policy.
Nwosu posited that the one-year waiting period would also enable the nation’s economy, especially its manufacturers, to recover from the debilitating effects of the COVID-19 pandemic.
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