Last Monday, the new excise duty for alcoholic beverages and tobacco earlier approved by President Muhammadu Buhari became effective. The federal government had, in March this year, announced a grace period of 90 days to manufacturers of the products to brace up to the new reality. Announcing the new rates three months ago, the Minister of Finance, Mrs. Kemi Adeosun, said the new excise duty rates would spread over a 3-year period from 2018 to 2020 in order to moderate the impact on prices of the products.
According to her, the upward review of the excise duty rates would achieve two purposes: to raise government’s fiscal revenue and reduce the health hazards associated with tobacco-related diseases and alcohol abuse. Mrs. Adeosun further said the new duty rates on tobacco were a combination of the existing ad-valorem base rate and specific rate, while the ad-valorem rate was replaced with a specific rate for alcoholic beverages. She said that under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette would attract one naira specific rate per stick or N20 per pack of 20 sticks in 2018. In 2019, tobacco would attract two naira specific rate per stick or N40 per pack of 20 sticks. And by 2020, the commodity would begin to attract N2.90 kobo specific rate per stick or N58 per pack of 20 sticks.
The minister also explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, in comparison to 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in The Gambia. She noted that the new specific excise duty rates for alcoholic beverages cut across beer and stout, wines and spirits for the period. Under the new regime, beer and stout will attract 0.30k per centilitre (cl) in 2018 and 0.35k per cl each in 2019 and 2020. Wines will attract N1.25k per cl in 2018 and N1.50k per cl each in 2019 and 2020, while N1.50k per cl was approved for spirits in 2018, N1.75k per cl in 2019 and N2 per cl in 2020.
In his own remarks, the Director-General, Consumer Protection Council (CPC), Babatunde Irukera, said the decision to increase the excise duty on these commodities was consistent with prevailing global practices. He said he was convinced that government’s approach would not only foster consumer confidence, provide regulatory clarity and prioritise safety but also reinforce the mandate of the council. Also weighing in, Akinbode Oluwafemi, the Deputy Executive Director, Environmental Rights Action of Earth Nigeria (ERAEN), described the decision to increase excise duty on tobacco as praiseworthy and timely
. “We applaud the federal government for making tobacco products priced beyond the reach of our kids and the poor who are unfortunately targeted by the tobacco industry through their cheap but lethal products. “Considering the looming tobacco menace in Nigeria, it is necessary to take stringent measures to halt the deliberate marketing of tobacco products to kids,” Mr. Oluwafemi said. In a similar vein, the International Monetary Fund (IMF) in its 2017 mission report advised Nigeria to raise the excise duty on a stick of cigarette to N5, which is five times the approved amount, noting that low tax level had prevailed in the country even though it is ranked the highest alcohol-drinking country in Africa and leads the top 10 largest beer drinking countries. However, the new rates fall short of the more aggressive recommendations of the World Health Organisation (WHO) in Article 6 of the Framework Convention on Tobacco Control (FCTC), which canvases 70 per cent excise duty on tobacco products. But the President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, expressed fear that the proposed hike may lead to closure of factories and loss of jobs in the country. We beg to disagree with him. Every critical decision comes with its consequences – positive or otherwise. It is the wellbeing of the generality of the citizenry that should be paramount in this circumstance and not keeping a comparatively few percentage on their jobs.
The entire nation must have been shocked by the recent revelation made by the Minister of Health, Prof. Isaac Adewole, to the effect that over 20bn sticks of cigarettes are consumed annually by no fewer than 4.5m smokers, while 82 per cent of non-smokers are exposed to second-hand puffs in public places such as bars and nightclubs. The minister, who spoke during a press briefing organised to mark the 2018 World No-Tobacco Day celebration in Abuja on Monday, said that in 2015, the country’s projected accumulated loss to tobacco was put at $7.6bn. He also revealed that Nigeria loses $800m annually to stroke, heart disease and diabetes.
Adewole also hit the bull’s eye when he revealed that for every $1 gained from tobacco business, about $3 is expended on healthcare cost, noting that the tobacco industry makes huge profit without taking responsibility for the harm they do to public health. Blueprint commends the federal government in its latest efforts aimed at saving Nigerians from themselves. Cigarettes and alcoholic beverages are drugs in their own right. Heavy dependence on them has its obvious implications. Government at all levels should look beyond the monetary gains which the new rates would guarantee. The ultimate objective is to ensure that Nigerians are weaned from the killer habits and new converts are discouraged.
