OrderPaperToday – The House of Representatives has resolved to investigate the low tax rate on tobacco and alcohol.
The House on Wednesday mandated its committee on finance to invite the Ministry of Finance to know why the tax rate on both products is not in line with global best practices.
The decision is sequel to a motion moved by Sergius Ose Ogun (PDP, Edo), entitled ‘Need to raise tobacco tax to be at per with global standards.’
Ogun while leading the debate stated that a similar motion was moved recently to increase tobacco tax rate as a means of curbing tobacco use and to channel the proceeds into funding of health care services and that a resolution was passed.
He explained that the President of the Federal Republic of Nigeria, via a circular dated 5 March 2018, issued by the then Minister of Finance, Mrs. Kemi Adeosun, approved the review of the excise duty rate and structure applicable to tobacco products and alcoholic beverages with an additional N1 specific tax on each stick of cigarette which would increase to N2 per stick in 2019 and eventually N2.90 per stick in 2020.
He noted “that the government‘s policy to increase the excise duty rate on tobacco products within the three year period which may amount to 30% to 35% in 2020, does not meet the World Health Organization (WHO) recommended 75 % excise tax burden, which is the current global best practice.”
According to him, “available data which shows that other African countries currently impose higher excise duty rate on unit cost of tobacco production with Ghana’s tax standing at 170%; Senegal at 45%; Gabon at12%; Algeria at 38.14%; South Africa at 36.52% and Gambia at 30%.”
The lawmaker further argued that a new excise policy is “aimed at not only increasing government’s revenue, but most importantly improving public health given the well-known deadly consequences of tobacco use, hence the desire for a more drastic excise policy.”
Speaking in support of the motion, Ayo Omidiran (APC, Osun) said that the tax raise will help to improve the revenue of the government, saying: “Although he (Ogun) is an opposition, but he is helping us to get money to spend on everyone. Despite the warning label on the cigarette pack, people still smoke, so we can get money from their habit, by collecting money from them. The chunk of the money raised should go into heath care, so that whatever ailment from tobacco will be taken care of.”