The Distillers and Blenders Association of Nigeria (DIBAN) has rejected the new ”astronomical increase” in excise duty on domestic wines and spirits.
DIBAN Chairman, Chief Patrick Anegbe, told newsmen in Lagos, yesterday, that the hike is a threat to the industry’s N420 billion investment.
Anegbe said that there was no prior engagement/consultation whatsoever with indigenous producers of wines and spirits before adopting the new excise method.
He said the association is particularly worried that the job of over 25,000 Nigerians, plus over 250,000 connected SMEs staff, are being threatened by the hike.
“We, Distillers and Blenders Association of Nigeria (DIBAN), under the auspices of the Manufacturers Association of Nigeria (MAN), reject the new astronomical hike in excise duty being selectively imposed on domestic wines and spirits, one of the oldest and driving indigenous industry in Nigeria.
“For the record, the new duty approved for implementation by the Minister of Finance translates to an increase in duty from the current average of N30 per litre to N150 in the first year and N200 per litre, subsequently. This translates to an increase from current average duty of N270 to N1,350 per case (carton) in the first year and N270 to N1,800 per case from second year. This is an increase of over 500 per cent purely on local wines and spirits with the exclusion of all imported wines, spirits and champagne.
“We reject in totality, the highly punitive and selective astronomical hikes in duty, a purely IMF agenda being camouflaged as a health concern!,” he said.
The chairman said that the excise duty increase is an attempt by the minister to foist an IMF sponsored agenda on Nigeria, “which would further compound the hardship of already impoverished Nigerians.”
He said if implementation of the new duty hike is allowed to proceed, it would lead to obvious job losses that would result from low demand of the products.
According to him, the new hike will lead to the collapse of the indigenous wines and spirits segment and pave way for the complete takeover of the market by the imported and smuggled brands.
”We are also disturbed that the new hike will not only affect the wines and spirits industry, but also, other key sectors of the economy and businesses such as packaging industries, bottles, cartons, labels, cork, laminates, glue, ink, printing, laboratory, marketing, consulting, media, among others.
”We strongly hold the view that if the intention of government is to grow local industries, imposing exorbitant duties on locally manufactured goods is a contradiction of that objective.
“For the sake of emphasis, from a recent study carried out by KPMG, it was concluded that price elasticity holiday spirits/wines segment is very high such that a 10 per cent increase in price of wine will lead to about 20.9 per cent fall in demand.
“A 19 per cent increase in the price of spirit will result in a 41 per cent decline in volume and this is predominant in the low price segments which represent 78.65 per cent of the total volume.
“With over 500 per cent increase approved by the government, the damage these will cause to locally produced wines and spirits business can only be imagined,” he said.