The Manufacturers Association of Nigeria has expressed concern that the recent increase in excise duty for beverage and tobacco products will force businesses to reduce their operations, which may lead to the closure of factories, job losses, and a decrease in exports, among other negative consequences.
According to The Punch, the President of MAN, Francis Meshioye, stated this on Tuesday during a press conference held in Lagos, to raise objections on the recently published 2023 Fiscal Policy Measures.
He said that the hike in excise duty contradicts a promise made by the Federal Government, through the Ministry of Finance, Budget and National Planning on March 23, 2023.
Meshioye highlighted that the substantial increase in excise duty outlined in the 2023 Fiscal Policy Measures caught the industry by surprise, as it essentially represented an additional increase on top of the one already approved for 2023.
Meshioye further emphasized that this increase comes at a time when the manufacturing sector is facing an unprecedented crisis and a severe recession due to various extraordinary challenges, such as the persistent scarcity of the national currency, limited access to foreign exchange, high inflation, and a struggling economy.
The President of MAN pointed out that the brewing sector, which will bear the brunt of the excise duty hike, experienced a significant decline of -169 per cent in profit before tax during the first quarter of 2023.
Additionally, the turnover for non-alcoholic beverages and tobacco declined by -15 per cent, while gross profit and profit before tax saw declines of -31 per cent and -96 per cent, respectively, within the same period.
In the words of Meshioye, “The manufacturing sector has been struggling with crashing sales, mainly attributable to the sustained naira scarcity. A continuing decline in sale volumes will necessitate production cuts and a reevaluation of investments in the sector.
“Specifically, if sales proceeds can no longer sustain business overheads and operating expenses, businesses will be forced to scale down their operations which would result in factory closures, job losses, a decline in exports and much more.’’
The Federal Government in its recently released fiscal policy introduced excise taxes increases ranging from 20% to 100% on previously approved rates for alcoholic beverages, tobacco, wines and spirits. The Federal Government has also placed Green Tax excise duty on Single-Use Plastics, including plastic containers, films and bags was introduced at the rate of 10%.