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FG’s alcohol, tobacco tariff hike

The moves by stakeholders in the alcohol and tobacco sectors of the economy to get the Federal Government to abandon its plans to hike excise tariffs on their products are understandable. It is their constitutional right to engage the government through lawful means to protect their interests, especially jobs, in the sector.

The Federal Government had announced Monday, 4th of June 2018 as the deadline for the clamping of a tariff increase, though President Muhammadu Buhari also approved a 90-day period of grace to enable manufacturers shape up to the policy.

Minister of Finance, Mrs. Kemi Adeosun, said the “slight” adjustment in the excise duty, aimed at shoring up Federal revenue, was undertaken in view of the fiscal measures of 2018 and cognisant of the reports of the World Bank and International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy. She also pointed at the need to limit the health hazards in the consumption of tobacco and alcohol.

In spite of the Federal government’s claim of “all-inclusive stakeholder engagement” in the industry, sectorial interest groups are threatening strikes and legal actions. These include the Association of Food, Beverage and Tobacco Employees (AFBTE), The National Union of Food, Beverage and Tobacco Employees (NUFBTE) and a non-governmental organisation, Business Renaissance Group (BSG) which has taken court action against the move which it describes as “discriminatory”.

Fears of the stakeholders are that the excise increase could trigger massive layoffs in the sector’s 20,000-strong work force, raise the prices of the locally-manufactured products and lead to the smuggling of cheaper foreign brands, which would hurt the economy in many ways.

We are surprised that in spite of the so-called stakeholder consultations before the decision was taken, there is still this level of disagreement. It simply means that the consultation did not achieve the desired result: consensus.

While we support the Federal Government’s legitimate efforts to upwardly adjust excise tariffs in this specific sector for reasons outlined above, we insist that the level of increase should not be punitive or draconian. Government has no right to prevent citizens who choose to use tobacco products or alcoholic beverages in spite of their inherent risk factors from doing so. But governments all over the world use strong tariff measures to control unguarded booms in the sector in the overall interest of the citizenry.

In the end, makers of these products pass-on the increase to their consumers who can then decide to continue their usage as before, cut consumption or quit. We call on the government to channel much of the proceeds of the tariff increase to more public enlightenment on the health hazards of alcohol and tobacco use. That way it justifies its concern for the overall good of the people.

 


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