New tax on alcohol, tobacco not targeted at local manufacturers

Nigeria’s newly increased tax on alcohol and tobacco is not targeted at local manufacturing industries, the country’s finance ministry has explained.

PREMIUM TIMES reported the new tax rates which commenced on Monday.

The finance minister, Kemi 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.

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.

In 2019, tobacco will attract two naira 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.

In a statement on Sunday, the finance ministry explained that imported alcoholic drinks and tobacco had higher taxes.

“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,” the ministry said in a statement by its spokesperson, Hassan Dodo.

Read the full statement below.

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

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.

2. 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.

3. 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.

4. 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.

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

6. 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.

7. 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.