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The Manufacturers Association of Nigeria (MAN) has lamented that the reintroduction of the excise duty on carbonated beverages would cause 0.43 per cent contraction in output and about 40 per cent drop in total industry revenues in the next five years.
The association estimated that the revenue drop would be due to imposition of new taxes with concomitant effect on jobs and supply chain businesses.
The Director General of MAN, Segun Ajayi-Kadir, who made the association’s stand known, noted that the introduction of excise duty of N10/liter on non-alcoholic, carbonated and sweetened beverages, despite its potential overwhelming negative impact is rather unfortunate. “There is no doubt that the potential revenue gains are the basis for the introduction of this excise.”
Ajayi-Kadir said It would appear that the goose that lays the golden eggs is being led to perdition, seeing that the affected sub-sector has contributed most significantly to the economy and taxes, despite the debilitating impact of Naira devaluation, inadequacy of forex and the COVID-19 pandemic.
“The food and beverage contributed the highest (38 per cent) of the total manufacturing sector to the GDP. It comprises 22.5 per cent of manufacturing jobs and generates more than 1.5million jobs. So, this excise would certainly cast a sunset to this performance.”
He added that the revenue aspirations of government in introducing this excise may not be justified in the long run.
“Let us look at it this way. The government is estimated to generate an excise tax of N81billion between 2022-2025 from the group. This will not be sufficient to compensate the corresponding government’s revenue losses in other taxes from the Group. For instance, the corresponding effect of reduced industry revenue on government revenues is estimated to be up to N142billion contraction in VAT raised by the sector and N54billion CIT reduction between 2022 to 2025. This is not to mention the potential negative impact on manufacture/supply chain.
He said what is not realised by many is that the excise begets high production costs which in turn adversely affects production levels and intimately results in dwindling profits. “This will grossly impact the small and emerging business owners in the non-alcoholic beverage sector.
