As from June 4, consumers of alcoholic beverages and tobacco products will pay more for them, as their prices will increase following government’s new tariffs regime. This came on the heels of Federal Government’s approved amendment to the excise duty rates for the affected products.
Under the new tariffs regime, the duty rates paid on the affected products have been marginally increased. According to the Minister of Finance, Mrs Kemi Adeosun, government has also granted a grace period of 90 days to all local manufacturers of the affected products before the implementation of the new duty rates will commence.
The new tariffs regime is the outcome of an all-inclusive stakeholders engagement by the Tariff Technical Committee (TTC) set up by the ministry in collaboration with key industry stakeholders. In coming up with the new tariffs, the TTC took into consideration government’s fiscal policy measures for 2018 as well as reports of the World Bank and the International Monetary Fund (IMF).
The new rates will cover a 3-year period, from 2018 to 2020. This timeframe will help to moderate the impact of the new tariffs on prices of the products.
Beyond the health hazards associated with tobacco-related diseases and alcohol abuse, Mrs. Adeosun explained that raising government’s fiscal revenues played a part in the decision.
Under the approved new duty rates for tobacco, each stick of cigarette will henceforth attract N1 or N20 per pack of 20 sticks in 2018. But from 2019-2020, tobacco will attract duties of N2 specific rate per stick or N58 per pack of 20 sticks. In rationalising this, the Finance Minister said that currently, “Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 percent of the price of the most solid brand as against 38.14 percent in Algeria, 36.52 percent in South Africa and 30 percent in the Gambia”.
The duty rates for alcoholic beverages cut across all brands, including beer, stout, wines and spirits for the three years (2018-2020). Under the new regime, beer and stout will attract 30 kobo per Centilitre (CI) in 2018, and 35k per CI in 2019 and 2020. Similarly, wines will attract N1.25k per CI in 2018 and N1.50k per CI each next year and 2020, while N1.50k per CI has been approved for spirits in 2018.
The new rates are said to be in line with the directive of the Economic Community of West African States (ECOWAS) Council of Ministers on the harmonisation of member-states legislations on excise duties at its 62nd and 79th Ordinary Sessions in Abuja, May 2009 and December 2017, respectively. In both meetings, the issues discussed included the need to explore non-oil products to shore up revenue generation, stimulate the scope of application and rate of taxation.
We commend the government for raising the tariffs on the affected products whose excessive consumption could dispose people to some life-threatening ailments. Government’s decision is in line with its duty to protect the welfare of the citizens and ensure they live a healthy life.
Instead of banning these products, especially tobacco consumption as advocates of anti-tobacco lobby groups have canvassed, government’s imposing of a marginal increase in duty rates on them seems the best option. At the same time, we doubt that the new tariffs regime will discourage the habitual consumers who will still buy them irrespective of the rise in prices. Overall, there is need for government to be cautious on how it imposes tariffs on products.
Already, many investors in the country feel overtaxed. Imposing tariffs on products is not good for economic growth, poverty reduction and job creation, which extant government policies have not quite addressed.