The Senate on Tuesday, November 27, 2018, asked the federal government to suspend the implementation of the excise tariff increment on alcoholic beverages and tobacco products – until all stakeholders have been consulted.
The demand was sequel to the adoption of the report of the Senate Committee on Finance.
The committee considered a motion, “The urgent need to review the excise tariff increment in order to save local distillers of beverages from looming extinction” – which was moved by Ben Uwajumogu (APC, Imo North) in May.
He had stated that the current excise duty paid by the locally produced beverages sector stands at 20 per cent across board. But under the approved excise duty tariff hike by the federal government, it is fixed at 67 per cent; a more than 300 per cent increase.
The federal government had in March, rolled out a proposal for the upward review of excise duty on alcoholic beverages and tobacco products.
The approval, according to the former Minister of Finance, Kemi Adeosun, was given by President Muhammadu Buhari, and would take effect from June 4, 2018.
Mrs Adeosun in a statement said the president also granted a grace period of 90 days to all local manufacturers before the commencement of the new excise duty regime.
She also stated that there would be no increase in excise duty of other locally produced goods and that the new excise duty rates would be spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.
In the committee’s report, presented by the chairman, John Enoh, it said the discussion with stakeholders should pave the way for consensus on the implementation .
It also said an increment of not more than 50 per cent should be adopted, “as it becomes necessary for the Federal Government to increase the tariff in order to boost revenue as the rate will provide more leniency to the affected manufacturers and give more hope for the survival of local firms”.
It stated that there is need to increase the import duties of foreign alcoholic beverages and tobacco products in order to give local firms more competitive edge.
The Senate urged the government to sensitise and carry along the 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.
The lawmakers agreed that if the new excise tariff is allowed to be implemented by the government, it will stand at about 500 per cent after the three years incremental period.
It also said 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 operation to neighbouring countries with favourable and flexible taxation policies for the sector.