Posted on February 16, 2018
The Minister of Finance, Mrs. Kemi Adeosun, has made moves to impose duty on consumer goods manufactured locally, investigation by our correspondent has revealed.
The goods targeted by the minister were removed from the excise duty list in 2009 with the aim of encouraging the local manufacturing industry to grow and be more competitive.
In a document obtained by our correspondent, the finance minister had written to President Muhammadu Buhari, seeking his approval to reinstate the consumer items on the excise duty list.
In addition to returning the items onto the list, Adeosun sought approval to review upward the tariffs on tobacco and alcoholic beverages, citing health concerns and the current economic realities.
Other items the minister wants to impose tariffs on are soaps and detergents, perfumes, cosmetics, fruit juice, spaghetti, noodles, telephone recharge card/vouchers, corrugated paper, paper board, cartons, boxes and cases made from corrugated paper and paper board, toilet paper and cleansing facial tissues.
She however suggested that only spaghetti and noodles should be removed from the list because of “the economic recession as well as the fact that they currently constitute a dominant and accessible food which is one of the most affordable by all economic classes of the society.”
In response to the proposed upward review of excise duties on locally produced wines and spirits, operators in that sector said that the decision would threaten an investment worth over N420bn.
In an open letter addressed to President Muhammadu Buhari, which was published by The PUNCH, the operators under the aegis of Distillers and Blenders Association of Nigeria maintained that far from being luxury items, their products were largely consumed by the low-end and mainstream segment of the society.
Their letter stated in part, “Any huge adjustment in our products’ prices occasioned by high excise duty will lead to low demand and staff layoffs. The estimated contribution of our industry in terms of corporate tax and Value Added Tax is N60bn per annum and the sector employs over 10,000 people directly and 15,000 indirectly.”
They also said, “While the proposed increase for beer sector is N6 per litre, wine is N114 per litre and spirit is N147 per litre. This is a clear case of discrimination and an attempt to kill the wine and spirits subsector in favour of the beer subsector for reasons that are difficult to understand.
“Most locally produced brands are packed at about N250 per bottle and a massive increase in the excise duty ranging from average of N142 to N175 per litre is a decision to kill the industry. This will also put local manufacturers at a disadvantage against imported brands.
“We are currently operating with marginal gain and any increase will bring us to negative balances, which will force us to shut up shop and retrench workers.”
According to stakeholders in the real sector, the impact of imposing tariffs on consumer goods will be devastating.
Data obtained from the National Bureau of Statistics showed that the local manufacturing sector was at a negative growth trajectory.
The sector first recorded its first positive growth of 1.36 per cent shortly after the recession, aided by some policy changes that favoured the local industry. But lack of effective implementation of the policies threw it back into a decline.
In the second quarter of 2017, the growth rate fell to 0.64 per cent and -2.58 per cent in the third quarter of the year – an indication that the sector might be drifting back into economic recession, the Manufacturers Association of Nigeria said in its latest outlook on the Nigerian economy.
For consumers, unemployment and inflation have wiped out purchasing power and manufacturers are lamenting that it is difficult for them to transfer the cost incurred from poor infrastructure and high interest rates to consumers since their purchasing power is very low.
In the past, any increase in prices of these common consumer goods had seen people switching to lower priced products mostly shipped in from Asia, manufacturers said.
According to the Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, it is not the best time to even consider imposing tariffs on consumer goods.
He blamed the trend on the government’s aggressive drive for revenue but warned that there was a need for moderation.
He said, “If the government is trying to grow the local industry, imposing duties on locally manufactured goods is a contradiction of that objective.”
That is what we are saying about this drive to earn revenue. If the revenue drive is becoming too aggressive, it will negatively affect investment and the capacity of businesses to create jobs.
“The imposition of duties on these fast-moving consumer goods will push up the cost of production and the prices of the items will be increased.
“These firms are already paying corporate tax, withholding tax, education tax and so many other taxes. Imposing excise duties on their products again will not be a good idea.”
MAN, a member of the Presidential Tariff Technical Committee, said it had taken a position on the planned tariff review in the last meeting it held with Adeosun.
It said that the association had rejected any imposition of tariffs on locally manufactured goods because the industry was still struggling for survival.
Source: https://punchng.com/operators-reject-excise-duties-on-made-in-nigeria-goods/Minister of Finance,