Relief for alcohol and tobacco manufacturers as Senate asks FG to suspended tariff hike

OrderPaperToday – The Senate on Tuesday asked the Federal Government to suspend the implementation of the excise tariff increment until all relevant stakeholders are adequately consulted and engaged to reach consensus rates.

The red chamber further set a maximum increment level of 50% should it become necessary for the FG to increase the tariff so as to give hope for the survival of indigenous companies.

The Senate reached the decisions following the consideration of a report by the Senate Committee on Finance on the urgent need to review the excise tariff increment in order to save local distillers of beverages from looming extinction.

Recall that the Senate on the 18th of May, 2018 mandated its Committee on Finance to organize a discourse between the FG and the relevant stakeholders of the beverages industry over the proposed increment in exercise tariff rates on alcoholic beverages and tobacco products.

Presenting the report today, Chairman Senate Committee on Finance, Senator John Enoh (APC, Cross-River) revealed that the Committee engaged the following stakeholders over the matter: the Ministry of Finance; Distillers and Blenders Association of Nigeria (DIBAN); Manufacturers Association of Nigeria (MAN); National Union of Food Beverage and Tobacco Employees (NUFBTE); Food, Beverage and Tobacco Senior Staff Association (FBTSSA).

Others are Nigeria Customs Service (NCS); Nigeria Labour Congress (NLC); and Business Renaissance Group (BRG).

Enoh disclosed that from the findings of the Committee during the meetings, majority of industry players and stakeholders claimed to not be properly consulted before the adoption of the new excise tariff rate which will stand at 500% after the three years incremental period.

He however explained that the government sought to implement the new rate to boost revenue and reduce health hazards associated with alcohol and tobacco products.

“The increase in excise tariff if fully implemented without review is capable of compelling affected companies that cannot stand the new rate to either shut down or relocate their full operations to neighbouring African countries with favourable taxation policies for the sector,” Enoh said.

Speaking further, the Chairman said the increment could affect business in other sectors that carry out production of cartons, labels, and so on, adding that the obtainable rates in the neighbouring countries of Chad and Niger stands at 25% and 45% respectively.

The Committee in its other recommendations stressed on the need to increase the import duties of foreign alcoholic beverages and tobacco products in order to give competitive edge to indigenous companies.

In addition, the Committee recommended that the FG should sensitize producers and consumers of alcoholic and tobacco products on the need for the increase and its impact in improving the fortune of the economy and health of the nation.

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