The Nigeria Employers’ Consultative Association (NECA), yesterday rejected the plan by the Federal Government to increase tariffs on select products.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had announced the proposal of higher duty on tobacco, spirits, alcoholic and N10/litre non-alcoholic beverages.
But NECA, in a statement by its Director-General, Adewale Oyerinde, warned that its implementation would incapacitate its productive capacity and consumption and the sector’s contribution to national development.
Oyerinde also said the move contravenes the roadmap set out in the 2022 Fiscal Policy Measures and Tariffs Amendments (FPM 2022) which covers 2022-2024.
He noted that historically, increments in duty often do not translate to increased revenue and called for a more sustainable excise regime.
The current minimal growth of the economy is an indication that a huge tax hike would not achieve the desired results for all stakeholders.
The statement reads further: “Historically, huge increases in excise duty often do not translate to increased revenue in the medium to long term. The more sustainable an excise regime is, the better the industry can contribute to the government treasury.
“Recent economic growth in Nigeria has been driven largely by the non-oil sector. Subjecting the sector to further hardship does not bode well for the future of the industry, or for the growth of government revenue in 2023 and beyond.
“The current minimal growth of the economy is an indication that a huge tax hike would not achieve the desired results for all stakeholders. The Organized Private Sector believes that the rate of increase in the roadmap of the Fiscal Policy Measures and Tariffs Amendments 2022 should be maintained.
“If another increase is imposed, the industry will suffer a further setback and more consumers may tilt toward purchases of products that are less expensive, 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 get industries back to a sustainable level and drive up employment rate, policies that could negate the little gains made so far in the economy should be suspended.”
Insisting that the status quo be maintained, Oyerinde said there is a need for the government to engage the private sector further on the matter for an amicable resolution.
He added that on-going collaboration with regulatory agencies with the view to monitoring the risk level of carbonated drinks can be sustained to guard against abuse, while producers could also state disclaimers as presently done in the tobacco industry.
