The Manufacturers Association of Nigeria (MAN) has opposed the Federal Government’s plan to introduce excise duty on carbonated drinks.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said recently that the Federal Government was considering introducing excise duties on carbonated drinks as part of efforts to broaden its revenue base.
Ahmed said the idea was one of other areas, besides the proposed increase in VAT, that the government was looking at to broaden its revenue base.
According to the minister, the government was working hard to ensure efficiency in existing revenue streams while searching for new ones.
Carbonated drinks include soft drink brands such as Coca Cola, Sprite and Fanta, while excise duty is a tax levied on locally produced goods.
But speaking in an interview with SHIPS & PORTS at the weekend, the President of MAN, Mansur Ahmed, described the move by government to impose more taxes on Nigerians as ill-timed, as it would further constrain the cost of manufacturers.
The MAN President said efforts should be made towards developing critical infrastructure, especially power and transportation, to improve businesses before increasing and introducing new taxes.
He said, “We understand that the government is in dire need of revenue but at the same time, I believe they also need to bear in mind that under the present circumstances, excise duty will significantly further constrain the cost of manufacturers especially at a time when we are trying to encourage the use of local raw materials. Also, given the fact that the general situation in the market is still very bad. We are seeing increasing level of warehouse stocked, which means that goods are not moving in the market. So we believe that these issues need to be weighed and the timing needs to be looked at.
“The government should delay increase in some of these taxes until other areas of cost of production begin to come down. For instance, if we improve the infrastructure side especially in the area of power and transportation, then businesses will improve and government can then look for taxes.
“Increase in taxes will lead to the cost of manufacturing and manufacturers, and given the situation in the industry especially on ease of doing business, although we see that it is improving in the light of the recent World Bank report with reforms that are being made, but at the same time, costs of production are increasing.
“We should not improve the business environment on one hand and then increase cost on the other. That would mean you are wiping out the gains you are creating, which is what government seems to be doing. So if they give you one thing with the left hand, they take it back with the right hand.”
The MAN President also advised the government to expand its tax net to include people in the informal sector that have not been paying taxes.