The Manufacturers Association of Nigeria (MAN) has hailed the decision of Federal Government to suspend the proposed hike in excise duty on beer, wines and spirits, tobacco and non-alcoholic beverage later this year, noting that the decision will bring succor to the operators.

Indeed, local operators had warned that the imposition of excise duty on all services will make the business community vulnerable.

According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, the new sugar tax was introduced to raise excise duties and revenues for health-related and other critical expenditures in line with the 2022 budget priorities.

Although the projected revenue was projected at N81 billion from 2021-2025, the potential loss to government in other forms of taxes and revenue cut leaves much to be desired.

The Manufacturers Association of Nigeria (MAN), through a series of advocacy channels, warned that a new tax imposed on carbonated drinks and others would be counter-productive and that the government should devise other means of generating revenue rather than inadvertently stifling the productive sector that is already struggling.

The association noted that the minister assured that the guidelines would not include the proposed increase in excise duty, but rather allow the excise regime to run its full course from 2022 to 2024 as programmed in the roadmap by the Federal Government in 2022.

“This comes as a huge relief to our members across the Federation and will signpost the administration’s support for the sustenance of manufacturing in Nigeria on this score.

“Furthermore, MAN received the understanding of Government on the introduction of 0.5 per cent Import surcharge, which is meant to fulfill Nigeria’s obligations to the continental agreement in the implementation of Africa Continental Free Trade Area (AfCFTA) agreement, as well as the promised intervention on resolving the logjams in the interpretation of the Tin Plate, HS Code 7210. 12.00.00 with the Nigeria Customs Service.

“From the foregoing, the association views the Federal Government’s move as one that will encourage our members who are currently struggling with unprecedented low sales, forex squeeze, inadequate electricity supply and multiple taxes and levies from the three tiers of government. This move will reassure members of the administration’s respect for stakeholder’s engagement and the usefulness of public-private sector dialogue”, MAN added.

Director of CPPE, Muda Yusuf, in a statement, titled, “Tweaking the 2023 Finance Bill and Options for Unlocking revenues in 2023”, had noted that the provision of the bill is too broad, inexact and wide-ranging, adding that there is no jurisdiction around the world where all services are liable to excise duty.

According to the CPPE boss, excise duties are typically specific and selective, and often imposed to disincentivise the consumption or production of particular product groups.

“The current open-ended provision is inimical to investment. It makes the imposition of excise duties arbitrary, indiscriminate and unpredictable. The bill should contain specifics of services to be taxed for better stakeholder engagement,” the CPPE statement said. It is important to consider the fact that practically all services are currently liable to Value Added Tax, the statement added.