A group of Nigerian business organizations called the Organised Private Sector, has rejected the recently announced increase in excise tax by the federal government.
The group includes, the Manufacturers Association of Nigeria, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, the Nigeria Employers’ Consultative Association, the Nigerian Association of Small Scale Industries, and the Nigerian Association of Small and Medium Enterprises,
The Minister of Finance, Budget and National Planning, Zainab Ahmed, reportedly signed the circular containing the hike on April 20, 2023.
In a joint statement accessed by The Punch, OPSN called for an immediate reversal of the hike, stating that it was unnecessary, poorly timed, and harmful to the Nigerian economy and the manufacturing industry, which is already struggling with various challenges.
The OPSN noted that the manufacturing industry is facing difficulties, including those caused by scarcity of naira, limited access to foreign exchange, a struggling economy, and persistent inflation, in addition to the ongoing issues of multiple taxation and unreliable power supply.
These challenges have resulted in a significant decline in sales for many businesses, amounting to billions of Naira, and as a result, manufacturers are finding it challenging to remain in operation.
There is a possibility of job losses, factory closures, and complete business shutdowns, according to the private sector.
The statement accessed reads in part, “Therefore, increasing excise rates at this time is extremely ill-advised and may sound the death knell for affected businesses and their contribution to the national economy, even as the broader manufacturing sector continues to deteriorate.
“In light of the above, the OPSN respectfully requests the Federal Government to urgently reverse the increase in excise rates to protect the affected industries and the dependent businesses in their extended value chain from imminent collapse with calamitous consequences for the economy.
“We further request that the Federal Government suspends excise taxes in the manufacturing sector for a minimum of six months, to arrest the alarming decline in the sector.”
In addition to calling for the reversal of the excise tax hike, the OPSN also urged the Central Bank of Nigeria to take swift action to address the scarcity of Naira and prioritize foreign exchange allocations to the productive sector.
They advised the bank to implement measures that would help to fully alleviate the Naira scarcity crisis, which has contributed to the challenges facing the manufacturing sector. They suggested that providing more foreign exchange to the productive sector would enable manufacturers to import raw materials and machinery needed for production and thus boost the sector’s growth.
