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Nigerian govt to earn N81bn from new excise duty on soft drinks

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MAN explains why over 400 manufacturers closed shop, sacked staff

The Manufacturer Association(MAN) has detailed what the new N10 per litre excise duty on carbonated, and non-alcoholic drinks means for the manufacturing industry and Nigerians.

In a report ‘key considerations against excise on non-alcoholic beverages’, MAN explained that the new law would be counterproductive and lead to revenue loss for the government.

According to MAN, from 2022 to 2025 the federal government might collect N81bn from the excise duty, but lose N197bn within the same period from other taxes, such as Value Added Tax and Company Income Tax from the manufacturers of soft drinks.

The report added that introducing excise duty would cause the beverage sub-sector of the food and beverage industry to lose up to N1.9tn in sales revenue between 2022 -2025, due to the imposition of the new taxes with simultaneous adverse effects on jobs and supply chain businesses.

Speaking further on the report, the Director-General of MAN, Segun Ajayi-Kadir said, “I would like to say that the introduction of excise duty of N10/litre on non-alcoholic, carbonated and sweetened beverages, despite its potential overwhelming negative impact is rather unfortunate.”

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He stressed that the excise duty tax would affect the sub-sector, which has contributed significantly to the economy and taxes, despite the debilitating effects of naira devaluation, inadequacy of forex, and the COVID-19 pandemic.

While adding that the government’s revenue aspirations might not be realised in the long run.

“The revenue aspirations of the government in introducing this excise may not be justified in the long run. Let us look at it this way. The government is estimated to generate an excise tax of N81bn between 2022-2025 from the group. This will not be sufficient to compensate the corresponding government’s revenue losses in other taxes from the group.”

Ajayi-Kadir also stressed that the excise duty might lead to employee salary reduction, retrenchment, and general increase in prices of goods.

“Expect higher prices for soft drinks, because manufacturers will want to cover costs and this might put the products out of the reach of the poor segments.”

He further appealed to the government to reconsider its plan.

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