N10/L Tax: Soft Drinks Will Become Out Of Reach For Many Nigerians, Manufacturers Warn Government
- MAN has reacted to the plan by the federal government to reintroduce excise duty on alcoholic drinks
- The manufacturers explain that the new excise duty will bring more pains to Nigerians as the price for products will have to increase
- They also argued that while the government think it will be making more money it will be in fact, losing more
The Manufacturer Association (MAN) has called on the federal government to reconsider its plan to introduce N10 per litre excise duty on carbonated, and non-alcoholic drinks.
MAN stated in a paper titled "Key Considerations Against Excise on Non-Alcoholic Beverages" that the proposed law would be unproductive and would result in income loss for the government, ThisDay reports.
According to MAN, between 2022 and 2025, the federal government may earn N81 billion from excise duty but lose N197 billion from other taxes, like Value Added Tax and Company Income Tax from soft drink makers.
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According to the report, imposing excise duty will lead the beverage sub-sector of the food and beverage industry to lose up to N1.9tn in sales revenue between 2022 and 2025, with concomitant negative consequences on jobs and supply chain businesses.
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Further reactions
Speaking further on the report, the Director-General of MAN, Segun Ajayi-Kadir said:
"I'd want to highlight that, despite its possibly significant negative impact, the imposition of a N10/litre excise duty on non-alcoholic, carbonated, and sweetened beverages is really unfortunate."
He stressed that the excise duty tax will harm the sub-sector, which has made significant contributions to the economy and taxes despite the crushing consequences of naira depreciation, money scarcity, and the COVID-19 outbreak.
He also noted despite the tax, the goals in instituting the tax may not be justified in the long term.
He explains:
"Take a look at it this way. The group is expected to produce an excise tax of N81 billion for the government between 2022 and 2025. This will not be enough to reimburse the corresponding government for the group's revenue losses in other taxes.
"The excise charge may result in pay reductions, retrenchment, and an overall rise in the price of products. Manufacturers will want to pay expenses, which may push items beyond of reach of low-income consumers."
He, therefore, called on the federal government to reconsider its plan, the Punch newspaper reports
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Legit.ng had earlier revealed how much 13 Nigerian companies listed on the Nigerian Exchange Limited (NGX) remitted to the Nigerian government.
The Federal Inland Revenue Service (FIRS) is one of the collecting agencies and recently declared it exceeded its target in the first eight months of 2021.
Companies operating in Nigeria are meant to pay income tax, Education tax, National Information Technology Development Agency (NITDA) tax, and Nigeria Police Trust Fund levy.
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