MAN Condemns FG 10% Duty On Non-alcoholic Drinks

The Director General of Manufactures Association of Nigeria, MAN, Mr Segun Kadiri, has described as unfortunate the introduction of #10 per litre excise duty on non-alcoholic, carbonated and sweetened beverages, despite its potential overwhelming negative impact.

Mr Kadir, who made this known in a statement, noted that the affected sub-sector, has contributed significantly to the economy and taxes, on the heels of the debilitating impact of Naira devaluation, inadequacy of forex and the COVID-19 pandemic.

He pointed out that in the manufacturing sector, food and beverage contributed the highest to the Gross Domestic product with 38 percent.

Mr Kadiri who explained that this comprises 22.5% of manufacturing jobs and generates more than 1.5million jobs, noted that the excise would certainly cast a set back to this performance.

The MAN DG further explained that recent studies have shown that Introducing excise on non-alcoholic beverages is likely to cause a 0.43% contraction in output and about 40% drop in total industry revenues in the next five years.

He stressed that the revenue aspirations of government in introducing this excise may not be justified in the long run.

Mr Kadiri said the government is estimated to generate an excise tax of #81 billion between 2022-2025 from the group.

According to DG MAN, this will not be sufficient to compensate the corresponding government’s revenue losses in other taxes from the Group.

He pointed out that the corresponding effect of reduced industry revenue on government revenues is estimated to be up to #142 billion contraction in Value Added Tax raised by the sector and #54 billion CIT reduction between 2022 to 2025.

Mr Kadiri stressed that excise begets high production costs which in turn will adversely affect production levels and intimately result in dwindling profits.

He also believed that this will grossly impact the small and emerging business owners in the non-alcoholic beverage sector.

DG MAN noted that Nigeria is the 6th highest consumer of soft drink but per capita consumption has remained low.

He however pointed out introducing excise will easily reduce production capacity causing manufacturers to struggle to meet investor commitments as well as cause investor to take investments to other countries.

Mr Kadiri said the decrease in production levels or ability to purchase raw materials as a result of the introduction of excise tax will result in reduced profits for the supply chain players in the non-alcoholic beverage sector.

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