Cost of soft drinks rises higher as excise duty tax takes effect

Access Bank
Amidst public outcry over what many described as multiple taxation the newly pronounced excise duty tax of N10 per liter on all non-alcoholic, carbonated and sweetened beverages has taken effect, The Nation can authoritatively report.
Checks by our correspondent across some malls, retail outlets in Lagos and environs showed that the cost of the carbonated drinks now reflect the new tax regime.

When The Nation visited some chain stores situated within Ilupeju, Mushin, Iyana-Ipaja, Victoria Island neighbourhood of Lagos, findings indicated that most of the price list of the affected drinks displayed on the shelves had since been reviewed upwards.

Speaking with a cross-section of shoppers they confided in The Nation that the cost of the drinks which hitherto sold at a certain price had been reviewed upwards.

Confirming this development, Hajia Halima Danesi-Yusuf, who deals on groceries said, a crate of Coca-Cola drinks on pet bottles hitherto sold for N2, 000 now goes for N2,300, ditto for other brands including malt and energy drinks.

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

It may be recalled that during the public presentation of the 2022 Appropriation Act in Abuja, Minister of Finance, Budget and National Planning, Zainab Ahmed, who announced the excise duty tax, said the move is part of the government’s plan to generate revenue and tackle the growing obesity and diabetes menace in Nigeria.

The policy, known as ‘Sugar Tax’, had been advocated since last year by a coalition of non-governmental organisations called National Action on Sugar Reduction (NASR), who believe it is needed if the Nigerian government is to tackle diabetes and obesity. The Sugar Tax thus becomes part of the new Finance Act signed into law by President Muhammadu Buhari on December 31, 2021, which as it unpacks, reveals a pack of new tax laws that touch many sectors of the economy.

Apart from consumers, manufacturers and distributors in the food and drinks sector are impacted by the Sugar Tax. Many started early enough to condemn the government’s move to introduce N10 tax on non-alcoholic beverages.

In addition to the high cost of goods and services, another angle to the pains of this excise duty was pointed out by the president of the National Union of Food, Beverage and Tobacco Employees, NUFBTE, Union, Mr. Lateef Oyelekan. He said, “Should this excise duty be imposed these companies would have no choice than to lay off workers. Some may have to reduce production lines instead of expansion, while some may even close down permanently. It has happened in the past. In 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.”

The Manufacturers Association of Nigeria (MAN), while expressing its concern about the excise duty on soft drinks, warned in a report that it would be counterproductive.

MAN, which made this known while reacting to last week’s introduction of excise duty of N10/liter on non-alcoholic, carbonated and sweetened beverages, said the revenue aspirations of the government in introducing the policy may not be justified in the long run.

“For instance, the corresponding effect of reduced industry revenue on government revenues is estimated to be up to N142 billion contraction in Value Added Tax (VAT) raised by the sector and N54 billion CIT reduction between 2022 to 2025. This is not to mention the potential negative impact on manufactures/supply chain,” he said.

While condemning the move, the Nigeria Employers’ Consultative Association (NECA) urged the federal government to suspend the new excise duty of 10/litre on carbonated drinks.

The association is the umbrella body of all employers’ groups in Nigeria.

The Nation

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