January 6, 2022

FG rebuffs private sector, imposes N10/litre tax on soft drinks

soft drinks, tax

By Emma Ujah & Peter Egwuatu

The federal government has in troduced an excise duty of N10 per litre on all non-alcoholic, carbonated and sweetened beverages.

Zainab Ahmed, Minister of Finance, Budget and National Planning, disclosed this during the public presentation of the 2022 Appropriation Act yesterday in Abuja.

Excise duty is a form of tax imposed on the locally manufactured goods.

The new policy, now referred as ‘Sugar Tax’, is contained in the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021.

Ahmed said the 2021 Finance Act also raised excise duties and revenues for the health sector.

READ ALSO: Labour kicks over FG’s plan to tax non-alcoholic drinks

The Minister said the excise duty on soft drinks would discourage excessive consumption of sugar beverages which contributes to diabetes, obesity among others.

She stated: “There’s now an excise duty of N10/ per litre imposed on all non-alcoholic and sweetened beverages; And this is to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.    

“But it is also used to revenues for health-related and other critical expenditures. This is in line with the 2022 budget priorities.”

On December 14, 2021, the Organised Private Sector, OPS, notified its rejection of the plans by government to reintroduce excise duty on carbonated drinks.

Communicating the position of the OPS, the Chairman, Mr Taiwo Adeniyi, stated: “It is instructive to note that Nigerian manufacturers have been contending with the dislocations caused by the pandemic and the recession that followed; they are also facing serious crisis resulting from liquidity challenges in the foreign exchange market, which is impacting adversely on the cost of production; in addition, they are faced with intense pressure arising from numerous structural bottlenecks that are creating sustainability challenges for investors, especially those in the SME segment.

Also of concern is significant spike in the cost of raw materials, cost of fund, high import duty, elevated energy cost, prohibitive cost of transportation and high cost of logistics/shipping.

“We therefore, urge Government to jettison the idea of reintroducing the Excise Duty on carbonated drinks but continue to support and promote the industry to attain full recovery after the onslaught of the pandemic and position it to further accommodate the teeming unemployed Nigerian, particularly the youths.”

Also president of the National Union of Food, Beverage and Tobacco Employees, NUFBTE , Union, Mr. Lateef Oyelekan, stated that: “Should this excise duty be imposed    these companies would have no choice than to lay off workers.

“Some may have to reduce production line instead of expansion, while some may even close down permanently. It has happened in the past. At the end, Nigerians are the ones that will suffer.

“These companies are already looking outside Nigeria for alternate production of their products and would rather move to a more favourable business climate in the West Africa region.”

Vanguard News Nigeria