Nigerians to pay more for alcohol, tobacco as new excise duty kicks of

The new excise duty for alcoholic beverages and tobacco will take effect from today, June 4, 2018. It will be recalled that Finance Minister of Finance, Mrs. Kemi Adeosun, had in March announced that President Muhammadu Buhari approved the increase and at the same time granted a grace period of 90 days to manufacturers of the products. There is however no increase in excise duty of other locally excisable products. The Minister of Finance, Mrs. Kemi Adeosun, who made this known over the weekend in Abuja, stated that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products. The Minister disclosed that the new excise duty regimes followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders. According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco was to raise the government’s fiscal revenues, adding that it would also reduce the health hazards associated with tobacco-related diseases and alcohol abuse. The Minister added that, “for Alcoholic Beverages, the current advalorem rate will be replaced with specifi c rates and spread over three years to moderate the impact on prices. This will curb the discretion in the Unit Cost Analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages.” She said that under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract one naira specifi c rate per stick; that is N20 per pack of 20 sticks in 2018. She said that in 2019, tobacco will attract two naira specifi c rate per stick or N40 per pack of 20 sticks. The minister said that by 2020, tobacco would begin to attract N2.90 kobo specifi c rate per stick or N58 per pack of 20 sticks. Adeosun explained that Nigeria’s cumulative specifi c excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand. This is as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia. She said also that the new specifi c excise duty rate for alcoholic beverages cut across beer and stout, wines and spirits for the three years. 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.

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