New excise duty rates not targeted at local manufacturers – Finance Ministry

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The Federal Ministry of finance has said that the new excise duty approved by President Muhammadu Buhari on alcoholic beverages and tobacco was not targeted at local manufacturers.

The Director, Information, federal ministry of finance, Hassan Dodo, in a statement said, the new excise regime seeks to achieve a dual benefit of raising the government’s revenues to support the nation’s growth and reducing the health hazards associated with tobacco-related diseases and alcohol abuse

According to him, “The attention of the Federal Ministry of Finance has been drawn to media reports that the new excise duty rates approved by President Muhammadu Buhari on alcoholic beverages and tobacco were targeted at local manufacturers.

“The Ministry wishes to unequivocally state that the new excise duty rates which came into effect from Monday, 4th June, 2018, were not targeted at the local manufacturers.

“The new excise regime seeks to achieve a dual benefit of raising the Government’s revenues to support the nation’s growth and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.

“Contrary to claims that the rates were selectively imposed on local manufacturers, there is currently a 60 per cent duty rate imposed on imported alcoholic beverages and tobacco as part of measures by the Government to encourage local production and protect local manufacturing industry. It should also be noted that beer and stout are currently under import prohibition to protect the industry from unfair competition from foreign brands.

“In addition, other locally excisable products such as non-alcoholic beverages, cosmetics, perfumes, corrugated papers or paper boards and cartons have no excise duties.

“We wish to clarify that the approved excise duty rates followed all-encompassing engagements with key industry stakeholders by the Tariff Technical Committee (TTC), of which Manufacturers Association of Nigeria (MAN) is a member. The stakeholders’ engagements contributed to the final recommendation.

“The Federal Government remains committed to the industrialization agenda and shall continue to put in place fiscal policy measures to protect local manufacturers and stimulate the growth of the economy.”

In March this year, the Minister of Finance, Kemi Adeosun had announced that the president had granted a grace period of 90 days to manufacturers of the products.

Adeosun said the new excise duty rates would spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.

According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco was to raise the government’s fiscal revenues.

She said that it would also reduce the health hazards associated with tobacco- related diseases and alcohol abuse.

Adeosun said the new duty rate on tobacco was a combination of the existing ad-valorem base rate and specific rate while the ad valorem rate was replaced with a specific rate for alcoholic beverages.

She said that under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract one naira specific rate per stick; that is N20 per pack of 20 sticks in 2018.

She said that in 2019, tobacco will attract N2 specific rate per stick or N40 per pack of 20 sticks.

The minister said that by 2020, tobacco would begin to attract N2.90 kobo specific rate per stick or N58 per pack of 20 sticks.

Adeosun explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand.

This is as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia.

She said also that the new specific excise duty rate for alcoholic beverages cut across beer and stout, wines and spirits for the three years, 2018 to 2020.

Under the new regime, beer and stout will attract 0.30k per centilitre (Cl) in 2018 and 0.35k per Cl each in 2019 and 2020.

Wines will attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for spirits in 2018, N1.75k per Cl in 2019 and N2 per Cl in 2020.

The Director-General, Consumer Protection Council (CPC), Babatunde Irukera, said the decision to increase the excise duty on these commodities was consistent with prevailing global practices.

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