Fanta, Coke, others to cost more as FG imposes N10/lt tax on drinks

Consumers of non-alcoholic beverages and carbonated drinks in Nigeria are to pay more as the Federal Government has introduced excise duty of N10 per litre on the drinks.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, announced this on Wednesday in Abuja at the public presentation and breakdown of the 2022 budget.

She said the charge on beverages was a new policy introduced in the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021 alongside the 2022 Appropriation Bill.

According to her, the development will discourage excessive consumption of sugar in beverages, which contributes to diabetes, obesity and other diseases.

In 2019, the finance minister had announced that the government may introduce excise duty on carbonated drinks.

In 2020, Hameed Ali,  Comptroller-General of the Nigeria Customs Service (NCS), had proposed the collection of excise duty on soft drinks.

He had also put forward the same proposal in 2021 at an interactive session on the 2022-2024 medium-term expenditure framework (MTEF), organised by the House of Representatives Committee on Finance.

Apart from the new ‘Sugar Tax’ in section 17, Ahmed said the 2021 finance Act also raised excise duties and revenues for the health sector.

But reacting to the development, Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf said the introduction of N10/litre excise duty on all non-alcholic, carbonated and sweetened beverages was a negation of the economic recovery and job creation aspirations of the Federal Government.

Yusuf, a former Director General, Lagos Chamber of Commerce and Industry, was quoted by NewsDirect as saying, “At a recent interaction with the National Assembly on the 2022–2024 Medium Term Expenditure Framework [MTEF], the Nigeria Customs Service proposed the re-introduction of excise duty on the production of soft drinks in the country.

“This proposal is ill-timed, insensitive and most inappropriate given the prevailing harsh economic and business conditions. The citizens and the business community are experiencing a galloping and volatile inflationary condition which is unprecedented.

“The proposal is also a negation of the economic recovery and job creation aspirations of the federal government. Many upcoming small businesses in the beverage sector would be hard hit by this proposal.

“The millions of micro enterprises in the soft drinks’ distribution chain will be adversely impacted by the imposition of the excise tax. This is detrimental to the job creation and poverty reduction commitment of President Muhammadu Buhari.”

He also said, “Nigerian manufacturing companies, and indeed most investors, are going through tremendous stress at the moment. They are currently grappling with serious macro-economic challenges and structural constraints impacting on capacity utilization, productivity and competitiveness. This is affecting sales, turnover, profitability, shareholder value and the sustainability of investments.

 

“The norm globally at this time is to provide incentives for industries to aid their recovery from the shocks of the pandemic and escalating costs. We cannot afford to be doing the exact opposite. Manufacturers across all product segments need a respite, especially in the light of the unprecedented escalation of production and operating costs.”