The imposition of the excise duty for me is a welcome idea. The beverage industry is a major contributor of waste. As a result of their product usage, a lot of the pet bottles are poorly discarded. This in turn blocks drainage systems. In the long run, it causes flooding. So I believe if the funds from this excise duty is judiciously used, it can help to take care of the waste.
The imposition of excise duty on soft drinks would affect productivity and employment in the country. I know the government is trying to raise revenue but I don’t know why they need to discourage the consumption of soft drinks. If you impose excise duty on a commodity that is price-sensitive, the demand will immediately drop as consumers will find alternatives. I think the way to raise revenue is first by growing the economy.
More Nigerians may lose their jobs and some producers of carbonated drinks will likely close shop as a result of poor sale should the Federal Government implement its planned imposition of excise duty on soft drinks.
The plan to impose excise duty on soft drinks is welcome but the government should exercise care in doing that. The cost of doing business in Nigeria is already high; excise duty imposition will further increase the cost. That is why I think it has to be very marginal in order not to discourage new investors who want to come into the industry or make existing investors move to other countries to run their businesses.
If government goes ahead to introduce exercise duty on soft drinks, the country will be in a total mess and there will be an outright collapse of the sector. The proposed collection is ill timed. I must say that Nigeria Customs Service (NCS) lacks the provisional power to collect excise duty without getting approval from the legislature. The collection of excise duty on the products would increase the cost of production. It is the consumers that will be made to bear additional burden as a result of the introduction of excise duty.
This move is ill timed, insensitive and most inappropriate due to the harsh economic and business conditions. Citizens and the business community are experiencing galloping and volatile inflationary conditions which is unprecedented. Millions of micro enterprises in the soft drinks’ distribution chain would be adversely impacted by the imposition of the excise tax and this will affect job creation. Let us not forget that Nigerian manufacturing companies, and indeed most investors, are going through tremendous stress at the moment. This is affecting sales, turnover, profitability, shareholder value and the sustainability of investments. The norm globally at this time is to provide incentives for industries to aid their recovery from the shocks of the pandemic and escalating costs. We cannot afford to be doing the exact opposite. The economy is still at a recovery phase, many manufacturing companies are yet to recover from the shocks and dislocations inflicted by the pandemic and the recession that followed. Customs and the National Assembly should take into considerations all of these. This should not be considered now and anytime soon.
The move by Customs isn’t necessarily a wrong or bad one but what is the essence of collecting duties on the items which would increase the cost of products in the nation’s already inflated market? There are two key things that I would like Customs to explain: the first one is the justification for the move. Collection of excise duty is a good thing anywhere in the world but what is the justification for it on these particular products? Another thing is the aspect of stakeholders’ engagement which is paramount in making such decisions. There ought to have been robust stakeholder’s engagement on this. Customs shouldn’t just impose because there would be cost implications for this move and the final consumer bears the brunt.
The imposition of excise duty on carbonated soft drinks will lead to many local manufacturers closing shop giving room to imported and smuggled brands. This is a wrong timing for such. The Federal Government should not allow this because of the prevailing economic conditions in the country. If Customs increases the excise duty because you want to guarantee the health safety of the consumers, then it should be done in a way that the consumers would not be affected. I appeal to the Federal Government to intervene because the market place is a competition between foreign and local brands and that the consumers will bear the brunt in the long run.
It is now glaring that this government does not have a better plan to encourage industrialization in this country. In the past, many companies have closed their manufacturing base in Nigeria and moved to countries like Ghana because there is no conducive infrastructure in Nigeria that would help their businesses. Cost of production is too high that is the reason why product from other countries is cheaper to afford compared to domestically produced goods. If the government approves for Customs to implement the excise duty, thousands of jobs will be lost. The government is not ready to create jobs, and they don’t encourage the industrialists that are ready to help the system. So, is this the best they could do to boost revenue instead of focusing on how to boost infrastructures and encourage businesses?
The economy is still at a recovery phase. I spoke with a friend of mine who is a manufacturer. He said many manufacturing companies are yet to recover from the shocks and dislocations inflicted by the pandemic and the recession that followed. Manufacturers are currently contending with a severe crisis resulting from liquidity in the foreign exchange market and sharp depreciation in the exchange rate which is impacting adversely on the cost of production. It is pertinent to point out that Nigeria’s economy is currently characterized by weak purchasing power which is taking a huge toll on sales and turnover of many manufacturers, leading to high inventory of manufactured goods. Many manufacturers are currently struggling with unfair competition, especially from products imported from Asia which have flooded the Nigerian market because of the porosity of the borders. These imports are often much cheaper than goods produced locally.
The excise duty proposition is not consistent with the desire of Mr. President to create jobs and to lift millions of people out of poverty. If anything, it is a negation of the President’s aspiration on job creation and alleviation of poverty. The National Assembly and the Federal Ministry of Finance would have to put on hold any move to impose excise duty on any segment of the Nigerian manufacturing sector.
Manufacturers, including soft drinks producers, are already paying numerous taxes and levies which put a lot of pressure on them. There are also a multitude of fees and levies imposed by many other government agencies at the federal, state and local government levels. The appeal is that the Nigeria Customs Service and the National Assembly should have a rethink on this matter.
This should not be considered at all during this period and I urge the government not to agree to this because they are always talking about protecting the interest of the masses. Imposing tax on soft drinks will affect the poor and the masses. Soft drink is what the poor drink to get energy. I am aware that it is fashionable to control sugar intake because of health reasons but Nigeria is not there yet. The poor need the sugar because that is where they derive their energy from. If the government is worried about sweetener intake among Nigerians, they can express this through education, telling people the disadvantages of consuming such substance and not payment of excise duty.
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