Senators kick against planned tariff hike on alcoholic beverages

FG increases excise duty on alcohol, cigarettes 

The Senate on Tuesday moved to review the hike in excise tariff imposed on local distillers of beverages.

In a motion titled, “Urgent need to review the proposed excise tariff increment in order to save local distillers of beverages from looming extinction”, sponsored by Benjamin Uwajumogu (APC, Imo North) and Eyinnaya Abaribe (PDP, Abia South), Uwajumogu said the current excise duty paid by the locally produced beverages sector stands at 20 per cent across board. But under the approved excise duty tariff hike by the federal government, it is fixed at 67 per cent; a more than 300 per cent increase.

The federal government had in March, rolled out a proposal for the upward review of excise duty on locally produced alcoholic beverages and tobacco products.

The approval, according to the Minister of Finance, Kemi Adeosun, was given by President Muhammadu Buhari, and would take effect from Monday, June 4, 2018.

Mrs Adeosun in a statement said the president also granted a grace period of 90 days to all local manufacturers before the commencement of the new excise duty regime.

She also stated that there would be no increase in excise duty of other locally produced goods and that the new excise duty rates would be spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.

In his motion, Uwajumogu explained that the beverage industry, which is one of the oldest surviving sector, currently employs about 250,000 Nigerians. He said an investment portfolio exceeding N420 billion is under real threat of extinction due to the proposed tariff hike.

He expressed worry that if the proposed hike is not reviewed, one of the consequences will be the potential loss of these jobs, as manufacturers within this sub-sector will be left with no option than to massively lay off workers. 

He said direct and indirect job losses arising from the proposed tariff hike would further worsen the deteriorating unemployment situation in the country with the attendant social consequences.

“The contemplated/planned tariff review of excise duty on locally produced beverages will kill the fledgling industry which is presently fragile and may wreak incalculable damage on our economy: it will also lead to increase in smuggling activities, huge capital flight across borders to more investor friendly countries, with the attendant danger of increase in restiveness amongst the citizenry under enormous socio economic pressure.

“The negative impact of the proposed tariff hike on our economy which is emerging from recession and the expected huge job losses, if this policy is sustained, will further destroy, degrade and imperil the chances of our economy for full recovery,” he said.

The Senate, thereafter, resolved to initiate a stakeholders public hearing and then referred the matter to the relevant committee for an unfettered discourse between the federal government and the relevant stakeholders in the beverage industry with a view to ”reaching a full understanding of the issues.” 

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