The Manufacturers Association of Nigeria (MAN) has warned that the effect of the planned introduction of excise duty on carbonated beverages may result in a N1.9 trillion revenue loss in Nigeria’s food and beverage sub-sector between 2022 and 2025.
The body cautioned that the excise duty on non-alcoholic beverages may cause output to shrink by 0.43 per cent and about a 40 per cent decline in total industry earnings in the next five years. The association also raised concern over the severe job losses and the shutdown of many companies that may arise.
The House of Representatives Committee on Finance, had last August, reached a decision that it would amend the Finance Act to cover the imposition of levies on carbonated and non-carbonated drinks after the Comptroller-General of Nigerian Customs Services, Col. Hameed Ali (retd),had called for the levying of beverages companies.
The Chairman, Fruit Juice Manufacturers Group of MAN, Fred Chiazor, who spoke on the sidelines of an event recently held in Lagos stated that the new tax policy on beverages would result in severe job losses and a decline in consumption.
He warned that the Nigeria would suffer infrastructural deficit which would cause increased expenses and risk and continued security concerns
While giving an overview of the excise tax situation, Chiazor noted that the proposed “Excise Duty” will cause a shrinkage in the beverage sector’s contribution to the national economy, which he reckoned to be in the region of 35 per cent of the manufacturing GDP.
“The beverage sub-sector of the food and beverage sector will lose up to N1.9 trillion in sales revenue between 2022 and2025, indicating a 39.5 percent loss due to imposition of the new taxes.
“The government could lose up to N197billion in VAT, EIT and CIT revenue occasioned by drop in industry performance.
“Total projected receipts is N81billion if excise tax is introduced on non-alcoholic beverages at N10 per litre. This excise gain does not compensate for potential revenue losses from Collective Investment Trust ( CIT), EIT, VAT and TET.
“The ripple effect will not only be seen in the beverage sector but will also have a huge impact on the sugar industry leading to loss of revenue, jobs and taxes paid by this sector,” he explained.
He, therefore, called on the government to suspend the planned re-introduction of excise on non- alcoholic beverages in 2022 and review in 2023 while working with the industry to carry out an in-depth impact assessment fashioning out the best approach that drives value for stakeholders.