Senate has asked the Federal Government to put on hold, implementation of an excise tariff increment on alcoholic beverages and tobacco products.
An excise duty is a type of tax charged on goods produced within the country, as opposed to customs duties, charged on goods from outside the country.
The Red Chamber said suspension of implementation of the excise tariff rate should be in force until all relevant stakeholders were appropriately and adequately consulted.
The nation’s upper legislative chamber noted that the discussion with stakeholders on the tariff regime should pave the way for a consensus and implementation approach.
The resolutions followed adoption of a report of the Senate Committee on Finance, which considered “The urgent need to review the excise tariff increment in order to save local distillers of beverages from looming extinction.”
Committee Chairman, John Owan Enoh, presented the 16-page report at plenary, yesterday. Increase in excise tariff rates on alcoholic beverages and tobacco products was approved by President Muhammadu Buhari after the adoption of the recommendation of the Tariff Technical Committee of the Federal Government. The main reason for the increase in the excise rate was said to be the federal government’s drive to increase revenue and the belief that taxation is proven to be a veritable tool in controlling consumption of alcohol beverages as they have negative health effect on consumers.
On its part, the Manufacturers Association of Nigeria (MAN) believes that the increase will give more competitive advantage to foreign products because foreign products would not be affected by the increment.
MAN, which described the increment as “outrageous as it stands at 500 per cent” added that “if the new rate is fully implemented after the three years incremental period, it is believed that a number of the local manufacturers will have no other option than to suspend operation.”
It suggested that 35 percent increment, at maximum, should be implemented by the government as it will guarantee the survival of the industry rather than a 500 percent increment which will put the entire industry in a very difficult situation.
But, Senate said an increment of not more than 50 percent, at maximum, should be adopted, “as it becomes necessary for the federal government to increase the tariff rate in order to boost revenue generation as the rate will provide more leniency to the affected manufacturers and give more hope for the survival of the indigenous companies.
The upper legislative chamber also resolved that there is the need to increase the import duties of foreign alcoholic beverages and tobacco products, in order to give local indigenous companies more competitive edge.
The chamber asked the federal government to sensitise and carry along producers and consumers of alcohol and tobacco products, to understand the need for the increase and its advantage in adding to the economic fortunes of the country.
Senate also agreed that if the new excise tariff rate is allowed to be implemented by the federal government, it will stand at about 500 percent; after the three years incremental period.
It also said that if the tariff is fully implemented without review, “it is capable of compelling affected companies that cannot stand with the new rate to either shut down or relocate their full operations to neighbouring African countries, with favourable and flexible taxation policies for the sector.”
The new excise tariff was announced by erstwhile minister of Finance, Mrs. Kemi Adeosun, on November 24, 2017.
Adeosun disclosed the new tax regime at the Economic Community of West African States (ECOWAS) financial Council of Ministers in Abuja.