By Joy Obakeye
The President of the Manufacturers Association of Nigeria (MAN), Mr Francis Meshioye, has urged the federal government to suspend the 2023 Fiscal Policy Measures (FPMs) on excise duty and retain the 2022 -2024 excise duty roadmap as approved in the 2022 FPM, to foster stability in the affected sectors and their value chain, in the interest of the national economy.
Meshioye disclosed this in Lagos, at a press conference by MAN on the “Increase in Excise Rates for Alcoholic Beverages and Tobacco, as contained in the 2023 FPMs dated 20th April 2023.
He noted that the rate of the excise increase was exponential and excessively burdensome as the FPM increased the excise for beer products by about 200 per cent, while the tobacco industry was being taxed five times more than average the average for other industries.
He stated that the increases in excise duties on beer and tobacco as contained in the FPM were, “an increase on an increase,” since there was already an existing approved increase for 2023.
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According to him, “Reverse the tax on Single Use Plastics and engage with relevant stakeholders to facilitate ongoing initiatives, which have a better prospect of achieving the desired environmental objectives. A good example of this is the Food & Beverage Recycling Alliance, approved by the federal government.
“Consider, with input from the sector and other critical stakeholders, alternative measures to achieve revenue and other objectives of the government sustainably.”
The president of MAN warned that it would be illusory for the federal government to persist in implementing the 2023 FPM in the hope that it would garner more revenue, adding that the measures would spike illicit trade in tobacco products to its current levels of 15 per cent to undesirable levels of above 50 per cent of the sector that government would receive no revenue from.
“The decline in profitability of the industry will result in a decline in the industry’s total tax contribution to the government, because companies’ income tax (CIT), value-added tax (VAT) and education tax are directly tied to the performance and profitability of the company.
“In Q1 2023, while tobacco manufacturer’s contribution to excise grew by 7.0 per cent, its VAT contribution dropped by -36 per cent compared to the same period in 2022,” Meshioye said.
He further argued that the manufacturing sector’s value chain would be severely impacted as a crash in sale volumes and consequent cuts in production would severely impact these businesses in the value chain, which will have a multiplier effect on the national economy.
“For instance, supplier transactions in the sector declined by over N260 billion by the end of 2022, when compared to 2021.
“The total excise derivable from the excisable sector is insignificant when compared to Nigeria’s revenue needs. The revenue need of the government has been mooted as a reason for the excise increase. However, the total excise receivable from the sector is insignificant when compared to Nigeria’s revenue needs. The total excise received in 2022 was about a billion,” he said.
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