by Bimbola Oyesola, [email protected]
The Nigeria Labour Congress (NLC) at the weekend expressed its rejection of imposition of excise duty on carbonated drinks, warning the Federal Government to rescind the decision and not allow it to lead to industrial action.
This is even as it noted that the action on the food sector will translate to a loss of N1.9 trillion.
In a statement titled “Nigerian workers reject imposition of excise duties (Indirect Tax) on locally produced carbonated drinks” by the the NLC president, Ayuba Wabba, the NLC condemned the reintroduction of excise duty, calling on the National Assembly to quickly amend the sections of the Finance Act that re-introduced excise duties on non-alcoholic and carbonated drinks.
“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,” Wabba cautioned.
He recalled that on the 31st of December, 2021, President Muhammadu Buhari signed into law the Finance Act, with some of the provisions of the Finance Act including the imposition of excise duties on locally produced non-alcoholic, carbonated, and sugary drinks.
According to the NLC president, the reason offered by government for this decision was to discourage the consumption of sugar by Nigerians as it has led to upsurge in obesity and diabetes.
Wabba said the health reason proffered by government as reason for the reintroduction of the excise duties seemed altruistic.
“Yet, we are amiss why the government did not place the excise duties on sugar itself as a commodity rather than on carbonated drinks. The truth of the matter is that additional increase in the retail price of carbonated drinks would put more Nigerians at risk of serious health challenges as many people would resort to consuming sub-standard and unhygienic drinks as substitutes for carbonated drinks,” he opined.
He explained that the NLC in a letter dated 27th November, 2021, had written President Buhari 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 we advanced 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 imposition of excise duties as it would be priced beyond the reach of many Nigerians.”
The labour leader said the 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 rollback in investments with the certainty of job losses and shutdown of manufacturing plants.
He said, “Nigerians would recall that this was also the complaint of tyre manufacturing companies such as Dunlop and Michelin, which was overlooked by government until the two companies relocated to neighbouring Ghana. A similar situation is playing out with the soft drinks manufacturing sub-sector. Government should pay attention.
“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. There is thus no gainsaying the fact that the industry is a golden goose that must be kept alive.”
He maintained that the appeal to rescind the re-introduction of excise duties on nonalcoholic 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, he noted will lose 40% of its current sales revenue, adding that this translates to a loss of N1.9 trillion, while the government will only make a total projected receipts of N81 billion from the proposed reintroduction of the excise duties. “Government also stands to 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,” he said.
Rather than imposing taxes that will kill the industry, Wabba charged 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.
The NLC equally 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 the issue.