Follow Us on Google
From Isaac Anumihe, Abuja
Drinkers of non-alcoholic drinks and carbonated products will have to pay a little more as the government has introduced
N10 excise duty per litre of all non-alcoholic and sweetened beverages.
This is part of measures to shore up revenue and address the low taxation in the country.
Speaking during a public presentation of the 2022 Appropriation Act, yesterday, in Abuja, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, recalled that the new policy which is in the Finance Act was signed into law by President Muhammadu Buhari on December 31, 2021.
According to the minister, apart from increasing revenue, the policy will also discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.
Recall that in 2017, the Federal Executive Council (FEC) approved the revised National Tax Policy to increase Value Added Tax (VAT) on luxury items, like champagne, luxury cars, and other luxury goods.
The then Minister of Finance, Mrs Kemi Adeosun had said that while the implementation of the revised policy would take immediate effect, some aspects that required changes in law would be referred to the National Assembly for action.
She said that Nigeria was one of the countries with the lowest Gross Domestic Product (GDP) tax ratio in the world, adding that non-payment of tax was one of the biggest factors that contributed to the nation’s current economic situation, hence the need for the revised policy.
In implementing the new policy, Adeosun had said the government would attempt to reduce the number of taxes with emphasis on indirect taxes, as well as centralising tax administration where possible.
“What the committee has shown is that we should look at actually increasing VAT on some luxury items. With VAT of five per cent, we have the lowest VAT. While we don’t think VAT should be increased on basic items, if you are going to drink champagne in the United Kingdom, the VAT is 20 per cent; so, why should it be five per cent in Nigeria?
“So, they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately. And I think that is a very valid and sensible suggestion, which we are going to talk to the National Assembly about to see how we can implement it.
“But as far as basic goods are concerned, no. I believe it is only fair that when you consume luxury goods, you should pay a little bit more. The National Assembly will decide the percentage.” Adeosun, said.
The minister said that the objectives of the revised policy included to guide the operation and review of the tax system; provide the basis for future tax legislation and administration; provide clarity on the roles and responsibilities of stakeholders; and standard benchmark on which they would be held accountable.
Also, while unveiling its austerity measures, the administration of former President Goodluck Jonathan had in 2014, identified some items that were to be taxed as luxury goods to include champagne, alcoholic beverages, private jets, luxury cars based on engine capacity, and yachts.
It had estimated to generate about N480 billion from taxes on luxury items in the 2015 fiscal period
