By Emmanuel Nduka
The Manufacturers Association of Nigeria (MAN) has kicked against the N10/litre tax imposition on soft drinks by the President Muhammadu Buhari administration.
Segun Ajayi-Kadir, MAN Director-General, in a statement, warned that the excise duty will lead to 0.43 percent contraction in output and 40 percent drop on industry revenues in the next five years.
Nigeria’s Minister of Finance, Zainab Ahmed, had announced the imposition of N10 per litre on all non-alcoholic, carbonated and sweetened beverages.
The move, the Nigerian Government said, was to discourage excessive consumption of sugar due to health concerns.
“There’s now an excise duty of N10/ per litre imposed on all non-alcoholic and sweetened beverages.
“And this is to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.
“But also used to raise excise duties and revenues for health-related and other critical expenditures.
“This is in line also with the 2022 budget priorities,” the Nigerian Government said.
MAN, however, explained that beverages contributed 38 per cent of the manufacturing sector to Gross Domestic Product (GDP), adding that the sector boasts of 22.5 per cent of manufacturing and generated more than 1.5million jobs.
The body further warned of the effect the tax on the masses, amid the “unpleasant impact on employment, households and consumers, adding that as seen from previous analysis, excise affects production outputs, revenues and profits.
“This causes companies to pursue cost cutting measures to reduce the effect of diminishing revenue and profits by reducing employee salaries or retrenchment,” he said.
Ajayi-Kadir speculated that the tax estimated to generate N81billion between 2022-2025 would not be enough to compensate the government’s revenue losses in other areas.
“The effect of reduced industry revenue on government revenues is estimated to be up to N142billion contraction in Value Added Tax (VAT) raised by the sector, and N54billion Corporate Income Tax reduction between 2022 to 2025
“Nigeria is the 6th highest consumer of soft drink, but per capita consumption is low. Excise will easily reduce production capacity causing manufacturers to struggle to meet investor,” he warned.
