OPS opposes plan to raise the excise tax on carbonated beverages, as do others.

Ibekimi Oriamaja Reports

The Nigerian Organized Private Sector (OPSN) has expressed concern about a proposal by the Federal Ministry of Finance, Budget, and National Planning to raise excise on tobacco, spirits, alcoholic and non-alcoholic beverages.

The body, which described the planned increase through the ministry’s tariff technical committee as “another burden too many,” claimed it conflicts with the recently established 2022 Fiscal Policy Measures and Tariffs Amendments (FPM 2022), which covers the years 2022-2024.

Adewale Oyerinde, a member of the OPS and Director-General of the Nigeria Employers’ Consultative Association (NECA), condemned the move, saying businesses are still recovering from challenges that threaten to cripple their productive capacity and contribution to national development.

He claimed that raising excise in an unsustainable manner would cause government revenue from the industry to plummet rather than increase.

“Historically, large increases in excise duty have not always resulted in increased revenue over the medium to long term.” “The more sustainable an excise regime is, the more effectively the industry can contribute to the government treasury,” he explained.

Oyerinde also recalled that Nigeria’s recent economic growth has been largely driven by the non-oil sector. He emphasized that subjecting the sector to additional hardship does not bode well for the industry’s future or the growth of government revenue in 2023 and beyond.

He claimed that the economy’s current slow growth demonstrated that a large tax increase would not achieve the desired results for all stakeholders. He urged that the rate of increase in the Fiscal Policy Measures and Tariff Amendments 2022 roadmap be preserved.

“If another increase is imposed,” he says, “the industry will suffer a further setback, and more consumers may shift toward purchases of less expensive products – typically those sourced from the illicit market on which no form of Nigerian Tax (including excise) has been paid.”

While efforts are being made to return industries to a sustainable level and increase employment, the NECA president urged that policies that could undermine the economy’s small gains be suspended.

He urged that the proposed increase be postponed and that the status quo of no excise increase – other than as prescribed in the President’s 2022 Fiscal Policy Measures approved earlier this year – be maintained (the three-year roadmap which commenced on June 1, 2022). He also stated that the government should continue to engage the OPS on the matter in order to reach an amicable resolution.

In response to government concerns, Oyerinde stated that ongoing collaboration with regulatory agencies with the goal of monitoring the risk level of carbonated drinks could be maintained to guard against abuse, and that producers could also state disclaimers, as is currently done in the tobacco industry.