The federal government has been advised by the Manufacturers Association of Nigeria (MAN) to reverse the recently increased excise charge on cigarettes and alcoholic beverages or risk the closure of enterprises in the sector.
Francis Meshioye, president of MAN, stated at a press conference held in Lagos that the hike will compel companies to scale back operations, which will lead to, among other things, plant closures, job losses, and a fall in exports.
Meshioye emphasized that the growth occurred at a time when the manufacturing sector was confronted with unusual difficulties, including a persistent shortage of naira, restricted access to foreign cash, high inflation, and a precarious economy. These difficulties included an unparalleled crisis and an acute recession.
He argued that the industry was shocked by the exponential increase in excise tax included in the 2023 Fiscal Policy Measures and that it violated a guarantee given to the association on March 23, 2023, by the federal government through the Ministry of Finance, Budget, and National Planning.
“Following significant industry input, the government launched a three-year excise strategy in 2018. The roadmap operated well until its conclusion in 2021, with no changes or problems. Given the certainty of excise, this allowed the industry to successfully plan its operations. The excise rates for 2020–21 were kept in place by the government in 2021 until May 2022, and during that time it actively engaged the industry to settle on a new roadmap. Following this discussion, the government published the 2022 FPM along with a revised three-year excise plan that, despite calling for increased tax rates, still took the industry’s possible effects into account.
MAN also requested that the government, “Reverse the tax on Single Use Plastics and engage with relevant stakeholders to facilitate ongoing initiatives, which have a better prospect of achieving the desired environmental objectives. A good example of this is the Food & Beverage Recycling Alliance, approved by the federal government.”
In addition, “Consider, with input from the sector and other critical stakeholders, alternative measures to achieve revenue and other objectives of the government in a sustainable manner.