By Merit ibe
An economist and a private sector advocate, Dr Muda Yusuf, has said the proposed re-introduction of excise duty on the production of soft drinks in the country by the Nigeria Customs Service (NCS) is ill-timed.
Yusuf, who noted that it was insensitive and most inappropriate given the prevailing harsh economic and business conditions, added that citizens and the business community were experiencing a galloping and volatile inflationary condition which is unprecedented.
According to him, the proposal is also a negation of the economic recovery and job creation aspirations of the Federal Government, saying many upcoming small businesses in the beverage sector would be hard hit by this proposal, millions of micro enterprises in the soft drinks’ distribution chain will be adversely impacted by the imposition of the excise tax and this is detrimental to the job creation and poverty reduction commitment of President Muhammadu Buhari.
He said manufacturers were still grappling with shocks and dislocations inflicted by the pandemic and the recession; contribution to GDP which is still less than 10 per cent; serious crisis resulting from liquidity in the foreign exchange market and sharp depreciation in the exchange rate which is impacting adversely on the cost of production; cost of production arising from numerous structural bottlenecks; weak purchasing power, which is taking a huge toll on sales and turnover of many manufacturers, leading to high inventory of manufactured goods; unfair competition, especially from products imported from Asia, which have flooded the Nigerian market largely because of the porosity of the borders; energy cost, which is currently at an all-time high, cost of logistics, which has continued to be on the upward trend.
In the light of the challenges, the former director general of the Lagos Chamber of Commerce and Industry (LCCI) recommended that the proposition to re-introduce excise duties on a segment of the food and beverage industry should be put on hold.
“The excise duty proposition is not consistent with the desire of Mr. President to create jobs and to lift hundred million people out of poverty in ten years. If anything, it is a negation of the President’s aspiration on job creation and alleviation of poverty. We implore the National Assembly and the Federal Ministry of Finance to put on hold any move to impose excise duty on any segment of the Nigerian manufacturing sector.
“The manufacturing sector offers a good platform for the laudable aspiration of President Buhari to create jobs and lift people out of poverty. But if the burden of tax becomes excessive and unbearable on this critical sector of the Nigerian economy, the achievement of job creation and poverty alleviation promised by the president will be difficult to achieve.
“It is worthy of note that manufacturers, including soft drinks producers are already paying numerous taxes and levies which put a lot of pressure on them. Some of the taxes and levies that are already being paid include: corporate income tax of 30 percent, education levies of 2 percent, VAT 7.5 percent, withholding tax, land rent, environmental tax and numerous unofficial taxes. There are also multitude of fees and levies imposed by many other government agencies at the federal, state, and local government levels. The appeal is that the Nigeria Customs Service and the National Assembly should have a rethink on this matter.”