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•2023 fiscal policy measures, negative signal to investors
By Merit Ibe, [email protected]
The Manufacturers Association of Nigeria (MAN) has decried government’s inconsistent policy following increases in excise tax for 2023 and 2024 as provided in the recently released 2023 fiscal policy measures and tariff amendment.
This is even as the association lamented that the release of the document just over one month to its expected implementation date and the end of the current administration, sends negative signals to the business community locally and internationally with implications for existing and potential investors.
MAN stated that the huge increases, which in some cases were up to 50 per cent on ad valorem and 75 per cent on specific duty rates, were above the already approved high increases of up to 50 per cent and 45 per cent respectively.
These increases, which would come into effect from June 2023 and renewed in June 2024, according to MAN were contrary to the already approved 2022 to 2024 excise roadmap, as contained in the 2022 fiscal policy which was to commence on June 1, 2022.
The Director General of MAN, Segun Ajayi-Kadir, who made the remarks noted that from the meeting held with the Minister of Finance, Budget and National Planning on March 29, 2023, MAN representatives were informed that the 2023 proposals on additional excise tax increases were stepped down until further consultations on the 2023 Finance Bill.
Ajayi-Kadir said based on the above, MAN members had finalised their annual strategies and projections while exporting members had concluded pricing negotiations for orders to the end of fiscal period, on the strength of the agreed excise roadmap and recent assurance from the fiscal authority.
Expressing surprise at the increases, the DG is of the view that as a major stakeholder, MAN had actively participated in the deliberations on the proposal and presented various positions from its members across all sectors, especially those directly impacted by the proposed measures.
“It is worrisome that the current situation is indicative of inconsistency in government’s policy, given that industries that are affected by excise tax administration already made three-year strategic plans based on the agreed calendar as scheduled in the roadmap including domestic and export sales prices, revenue and volume projections, tax burden calculations, etc.
“This in our opinion, may create credibility issues for the country with existing and potential investors, impacting Foreign Direct Investments (FDI) and the country’s Ease of Doing Business index among other implications.”
The MAN boss is worried that this was done without any consultation or assessment of the impact of the huge increases.
He pointed out that ironically, based on data from members of the association, government is unlikely to earn more revenue from further excise increases due to significant decline in sales by companies in the sector, yet the new policy is likely to fuel illicit trade, industry recession, capacity underutilization, layoffs, etc.
“The unilateral action by the government despite the complaint and persuasion by stakeholders for the fiscal authority to consider the consequence on the industries, businesses and the economy as a whole is quite unfortunate,” he said.
