The Manufacturers Association of Nigeria (MAN) insists that the imposition of 20 per cent ad valorem tax on soft drinks is anti-business.
The federal government had in the Finance Act 2021 introduced the excise duty which was tagged, “Sugar Tax”.
The Minister of Finance, Budget and National Planning, Zaynab Ahmed, had explained that the excise duty on soft drinks would discourage excessive consumption of sugar beverages which contributed to diabetes, obesity, among others.
“There’s now an excise duty of N10 per litre imposed on all non-alcoholic and sweetened beverages. This is to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions, including diabetes and obesity.”
MAN had raised alarm over the fresh tax burden of another 20 per cent ad valorem tax.
Rising from its meeting in Lagos recently, the group rejected the proposed tax, warning that such a move would spell doom for the sector as the effects of the prevailing N10 per litre tax regime were already crippling the sector.
They pointed out that a study revealed that the N10 per litre excise tax which took effect between June and August, 2022, showed an -8 per cent revenue decline as a direct result of excise tax implementation.
It is projected that the decline will hit -25 per cent by December, 2022, if not reviewed.
This excludes the cost of write offs of products produced, excised but not sold. With the proposed 20 per cent ad valorem tax introduction, the collapse of the soft drinks market is imminent.
“Most certainly, the additional 20 per cent will not only kill the sector but result in the loss of revenue by the federal government and a consequential phenomenal loss of jobs by various layers of the Nigerian workforce,” the group, which accounts for 33 per cent of the entire manufacturing sector in Nigeria, said after the meeting.
They also decried the devastating effects of the N10 per litre tax which they said had “become burdensome with the high cost of operation in the country and its constituent elements.”
