Why NLC And MAN Kicked Against The Re-introduction Of Excise Duty On Carbonated Drinks

 By tephen Ubanna

More facts have emerged why President Muhammadu Buhari, a retired Army General, led All Progressive Congress, APC, government, have been looking for alternative sources of generating more revenue locally in order to stop borrowing from the World Bank, multi-lateral financial Institutions and countries ready to help Nigeria, to fund its infrastructural development projects, particular, roads, and rail networks.

 The government may have started looking inwards to generate more revenue locally by increasing the pump price of Premium Motor Spirit PMS, popular Petrol, thus forcing Nigerians to pay more on a  litre of Petrol.

The government may have known that the Asian country of China and some other friendly developed economies that have been advancing loan to Nigeria including the multi-lateral financial institutions, are no longer ready to do so because of the difficulty of recovering their debt when it finally matures for repayment and the outcry of Nigerians against such loans to a government that has no listening ears.

 It was therefore not surprising why the Katsina state born Nigerian President and his Economic Advisers had put their axe together on the way forward. The Economic Advisers were said to have initiated talks with Hajia Zainab Ahmed, minister of Finance, Budget and National Planning and other officials of the ministry on ‘’the alternative ways of improving the sources of the country’s annual revenue generation. The discussion, according to informed sources had been o going since 2019, and dragged on to 2021.

President Muhammadu Buhari

 Hajia Ahmed and the ministry officials as well as the President’s Economic Advisers may have been guided in taking a decision on the reintroduction of excise duty to non-alcoholic carbonated drinks  by Hameed   Ali,  a retired  Amy Colonel and the Customs Comptroller General, proposal in 2020, on the need for the government to introduce  excise duty on carbonated  drinks.

 He was said to have 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 Committee on Finance. The minister and the House Committee on Finance members may have cue into the Customs Comptroller General’s Proposal that they were said to have to have rubber stamped it.

Note that’’ Excise Duty is a Charge on the production, sale or use of locally manufactured goods’’. The minister may have known that the introduction of the new tax regime would not be implemented without many facing legal battles because of the non-amendment of the Customs and Excise Management Act, CEMA, Cap 2004, which is still lying in the House.

Going by the Actnon- alcoholic beverages, fruit juice, wines, spirits and other alcoholic drinks are not currently  subject  to excise duties in Nigeria.

Hajia Ahmed: Minister Finance, Budget And National Planning

 Hajia Ahmed, the Finance minister, Ali, the Customs boss, and the House Committee on Customs believe that the excise duty which is a type of’’ indirect tax, would give the seller the freedom ‘’to pass the burden to the final consumer’’.

Informed sources told The Value News that the Katsina state born Nigerian President Economic Advisers and the ministry of Finance, Budget and National Planning including the House Committee on Finance may have reached working  agreement on the introduction of  the New Tax regime on non-alcoholic  carbonated drinks that it was included in the preparation of the N10.74 trillion 2022, budget expenditure  that had been signed into Law by the Nigerian President , despite his initial reservations with some of the  changes introduced  into the original budget figure and projects lined up for execution during the year by the Lawmakers.

The minister may have taken advantage of the presentation of the Budget breakdown to the National Assembly to announce the government strategic initiatives for robust revenue generation to fund the 20222 Budget expectations.  Some of the measures that was said to have been outlined to boost’’ the country’s revenue generation during the year   was a ‘’review of the sectors eligible for pioneer tax Holiday Incentives under the country’ Industrial Development Act, dimensioning of the cost of tax waivers, and  concessions’’.

  While the oil revenue forecast for the year was put at N3.36 trillion, because of the fluctuations in the International Oil market, the government had pegged the revenue generation from the non-Oil sector at N2.132 trillion. The fallout was the planned re-introduction of excise duty of N10.00 per litre on all carbonated drinks, which had been on the drawing board since 2019.

Ali: CG, Customs

Although the CEMA, which is the legal document guiding the Ali, led Customs, in their operations both at seaports, Airports and landborders, has not been amended by the National Assembly, to give legal backing to the new policy, the Finance minister had made Nigerians to understand that thene tax policy which had raised the country’s excise duty on carbonated drinks was contained in the Finance Act that was signed into Law by the retired Army General. On December 31, 2021.

Hajia Ahmed may have tried to win the heart of Nigerians to embrace the re-introduction of the excise duty on soft drinks when she said that ‘’it would discourage the excessive consumption of sugar beverages’’ which Doctors had repeatedly said ‘’contributes to diabetes, obesity among other health challenges’’.Many knew that the government in its aggressive revenue will eventually lead re-introduction of excise duty on carbonated drinks because of the large market it commands. As a prelude to the introduction of the new tax regime, it when it had introduced Sugar tax.

The minister may have given a signal to Nigerians that it should also be ready to pay more for consumption of alcoholic drinks,  biscuits, buns, cakes diary products and sweetened  beverages soon, with the  re-introduction of  excise duty on  on carbonated  drinks.

Comrade Wabba: President, NLC

Ayuba Wabba, President, Nigerian Labour Congress, NLC, who would not take it. He may have sent a message to the government that they will not accept the re-introduction of excise duty on carbonated drinks because of its telling effects on Nigerians who have been impoverished by the government anti-people economic policies over the last six years.

The Organised Labour are already beating the drum of war as a result of the Complaint  of the Carbonated drinks manufacturers  that ‘’the re-introduction  of  the excise duty would ‘’lead ‘’to a very sharp  decline in sales, forced  reduction in production capacity  and  a certain  roll back  in investments with the certainty of job loss and possible shut down  of manufacturing plants’’.

Aready, officials of the Carbonated  drinks manufacturing Companies, notably  Bevpak Nigeria Lmited, Euro Global Foods and Distilleries, Nigerian Bottling Company Limited, Crown Drinks Lmited, Seven-Up Bottling Company plc, Seven-Up Bottling Company,  Nigerian Bottling Company,  Bob Food &Beverages, Limca Bottlers plc and several other non -alcoholic drinks Companies are  watching  to see the action that may be taken by the NLC, before implementing their plan B, which may be worrisome to Nigerians  because of the number of people that may lose their job.

An aggrieved Wabba, had said that the food and beverage sub-sector will lose 40% of its current sales revenue, which analysts,  had said translates  to a loss of N1.9 trillion annually. The NLC, boss may have shocked Nigerians when he disclosed that the government will only make a total projected  revenue generation of N81 billion  from the proposed new tax regime from the food and beverages sub-sector of the economy

NLC/MAN Fears Drop In Sales Of Carbonated Drinks With The Re-Introduction Of Excise Duty

Given an insider Information,, the NLC President further said that  the government stands’’ to lose N197  billion in Value Added Tax, VAT,  Company Income tax,  and Tertiary Education tax  with the implementation of the  new excise duty regime which he had blamed  on the expected downturn  in the overall industry performance in  the entire manufacturing sub- sector, of the industry in Nigeria’’.

He noted that ‘’with 38% of the country’s entire manufacturing output  and 22.5% share  representation  of the entire manufacturing sector ,  the food and beverage industry  remains  ‘’the largest  industrial sub-sector  in the  nation’s economy’’.

The NLC President  had said that the industrial sub-sector, generated and paid  into  the Federation Account 202 billion as VAT, iover the last five years,  N7.3 billion as Corporate Social Responsibility and has created  well 1.5 million  decent jobs,  both directly and indirectly’’. The NLC, president had queried why the government did not  ‘’place excise  duties on sugar  itself  as a commodity  but on carbonated drinks’’, allegedly used by many, particular the poor in the society.

 He fears  that there may be a  possible increase  on the retail price  of Carbonated  drinks that  may force  many Nigerians  to resort to consuming sub-standard  drinks  such as Kunu  and other locally produced and unprocessed  drinks as alternatives for the  carbonated drinks  which may worsen people’s health Condition.

Ajayi-Kadir: DG, MAN

Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria, MAN, had corroborated the NLC president’s views that the re-introduction of excise duty on carbonated drinks would lead ‘’to job losses’’.  The MAN , Chief Executive Officer, CEO, who sees to  the day to day running  of the Association, had come out with figures to buttress their point  that  ‘’it will cause a  0.43% contraction in output and about 40% drop on total industry revenue in the next five years if the new tax regime was not reviewed’’. 

He had told those that cares to listen that the food and beverages sub-sector of the economy had contributed 38% of the total manufacturing sector quota to the country’s Gross Domestic Product, GDP.  He had confirmed Wabba, the NLC President’s claims that the sector comprised 22.5% of manufacturing jobs and had generated more than 1.5 million jobs in Nigeria.

The MAN Director General, who could  not hide his feelings  had said that the  new tax regime  would force many Companies  ‘’to pursue  cost-cutting  measures to reduce  the adverse effect  of dimensioning  revenue  and benefits  by reducing employee salaries or resort to retrenchment’’ in order to remain in the business.

 Despite reeling out the facts and figures, to support their claims on why the government should review the new tax regime on carbonated drinks, the Buhari led APC government may not do it to avoid playing into the hands of the Opposition People’s Democratic Party, PDP, which  are waiting in the wings to replace it in upcoming 2023, general elections by cashing in on the party gross inadequate economic policies which had turned Nigerian to a beggar nation to sell their Manifesto to Nigerians.  

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