Nigerian manufacturers condemn tax imposition on soft drinks

Manufacturers Association of Nigeria (MAN) has kicked against President Muhammadu Buhari administration’s introduction of tax on soft drinks.

The body warned that excise duty will lead to 0.43 per cent contraction in output and 40 per cent drop on industry revenues in the next five years.

Minister of Finance, Mrs Zainab Ahmed announced the imposition of N10 per litre on all non-alcoholic, carbonated and sweetened beverages.

The official said the government was trying to discourage excessive consumption of sugar due to health concerns.

Segun Ajayi-Kadir, MAN Director General, explained that beverages contributed 38 per cent of the manufacturing sector to Gross Domestic Product (GDP).

The official said the sector boasts of 22.5 per cent of manufacturing and generated more than 1.5million jobs.

Ajayi-Kadir warned of the effect the tax on the masses, amid the “unpleasant impact on employment, households and consumers.

The DG stated 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”, NAN quoted him as saying.

Ajayi-Kadir posited 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.”

He further warned of the negative impact that manufacturer as well as supply chain would face.

“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”, Ajayi-Kadir cautioned.