Nigerian Manufacturers Lament Another 50%, 75% Increase in Excise, Ad Valorem Tax on Beer, Wine, Tobacco

The Manufacturers Association of Nigeria (MAN) has bewailed the huge increases in excise tax for 2023 and 2024 as contained in the newly released Fiscal Policy Measures for 2023 by the Federal Ministry of Finance, Budget and National Planning, following the approval by President Muhammadu Buhari.

MAN stated that the huge increases, which in some cases were up to 50 per cent on ad valorem and 75 per cent on specific duty rates, were over and above the already approved high increases of up to 50 per cent and 45 per cent respectively.

These increases, which would come into effect from June 2023, and renewed in June 2024, according to MAN were contrary to   the already approved 2022 to 2024 excise roadmap, as contained in the 2022 Fiscal Policy that its implementation commenced on June 1, 2022, but, “has unfortunately not even been implemented for up to one year, before government decides to ‘shift the goal post.’”

The Director General of MAN, Mr. Segun Ajayi-Kadir, in a statement, said, “the industry cannot afford any further increases at these extremely challenging times.”

The statement was titled: “The Reaction of Manufacturers Association of Nigeria to the Newly Released 2023 Fiscal Policy Measures and Tariff Amendments.”

Ajayi-Kadir further lamented that the increases were done without the government holding any consultation with affected manufacturers or carrying out assessment of their impact on the firms in particular and the economy in general.

He said: “We have earlier noted and forwarded our position on the excise duty tax to the government while it was being proposed in the 2023 Fiscal Policy Guidelines.

“We are again emphasising the fact that the proposed increase in the recently released 2023 guidelines i.e., on beer, wines and spirits, tobacco, has the potential to trigger unprecedented distortions in the affected industries as well as the entire manufacturing sector.

“The policy is capable of producing negative effect on investments with a huge consequence on job retention in these industries.

“We, therefore, strongly recommend that government should maintain the status quo regarding the already government-approved excise duty increases on these items in the three-year roadmap as contained in the 2022 Fiscal Policy Measures. This was approved by Mr. President and implementation commenced on June 1, 2022.”

The director general of MAN, sadly noted that, “the unilateral action by the government despite the complaint and persuasion by stakeholders for the fiscal authority to consider the consequence on the industries, businesses and the economy as a whole is quite unfortunate.”

He stated that MAN has carefully studied the newly released Fiscal Policy Measures for 2023 by the federal government, but noted that, “the increases in excise tax for 2023 and 2024 as provisioned in the said 2023 Fiscal policy, came as a surprise to us because, as a major stakeholder, MAN had actively participated in the deliberations on the proposal and presented various positions from its members across all sectors, especially those directly impacted by the proposed measures.”

Sounding betrayed by the federal government, the manufacturers association recalled that, “from the meeting held with the Honourable Minister of Finance, Budget and National Planning on March 29, 2023, MAN representatives were informed that the 2023 proposals on additional excise tax increases were being stepped down until further consultations on the 2023 Finance Bill.”

The statement added: “Additionally, Nigeria Customs Service was notified by the Federal Ministry of Finance vide Memo Ref. No. F. 17417/351 of February 15, 2023, that the existing Fiscal Policy Measures for 2022 as they relate to alcoholic beverages and tobacco products will take effect from June 1, 2023, and June 1, 2024, as approved in the 2022 Fiscal Policy Measures roadmap for 2022 to 2024.”

Ajayi Kadir said based on the above that there would be no further increases on excise duty, MAN’s members had finalised their annual strategies and projections while exporting members had concluded pricing negotiations for orders to the end of fiscal period, on the strength of the agreed excise roadmap and recent assurance from the fiscal authority.

He warned that, “the   release   of   the   2023   Fiscal   Policy   Measures, just   over   one   month   to   its   expected implementation date and the end of the current administration, sends negative signals to the business   community   locally   and internationally   with   implications   for existing   and   potential investors.

“It is worrisome that the current situation is indicative of inconsistency in government policy, given that industries that are affected by excise tax administration, already made three-year strategic plans based on the agreed calendar as scheduled in the roadmap including domestic and export sales prices, revenue and volume projections, tax burden calculations, etc.

“This in our opinion, may create credibility issues for the country with existing and potential investors, impacting Foreign Direct Investments (FDI) and the country’s Ease of Doing Business index among other implications.

“It is, therefore, alarming and concerning that the implementation of the 2022 to 2024 approved excise roadmap, as contained in the 2022 Fiscal Policy (which commenced on 1st June 2022) has unfortunately not even been implemented for up to one year, before Government decides to ‘shift the goal post’.

Dike Onwuamaeze

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