In March 2018, President Muhammadu Buhari approved the amendment to the excise duty on alcohol and tobacco. This took full effect on June 4, 2018. Nigeria’s former Minister for Finance, Mrs Kemi Adeosun had explained that the upward review was to achieve dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.
The new excise duty rates were to be spread over a three-year period from 2018 to 2020 in order to moderate the impact of the prices on the products.
However, during a Senate meeting which held on the 27th of November, the Senate asked that the new tariffs on alcohol and beverages be suspended immediately by the federal government pending further consultation.
According to a report from the Senate’s finance committee headed by John Enoh, the Upper chamber of the National Assembly said more discussions with stakeholders would pave way for a general agreement. The Senate has asked that the government both producers and consumers of alcoholic and tobacco products be fully equipped in order for them to fully understand the motive behind the move.
Also, in a public hearing organised by the Senate, the Manufacturers Association of Nigeria (MAN) expressed their concerns by stating that the 500 percent increase in tariffs on alcohol and tobacco would give a more competitive advantage to foreign products because they are not affected by this increment. The Senate resolved that there was a need to increase the import duties on foreign products in order to give local indigenous companies a more competitive advantage.
The Senate also advised that the increase in tariff should not be more than 50 percent “as it becomes necessary for the federal government to increase the tariff in order to boost revenue generation as the rate will provide more leniency to the affected manufacturers and give more hope for the survival of the indigenous companies.”
Although the government’s decision to increase tariffs may have been paved with good intentions, there are still some other factors to be considered. If the new tariffs are not reviewed as suggested by the Senate, a lot of local manufacturers might stop operating because they would be unable to meet the tariff payments. This would defeat the initial intent of the government to generate more revenue from as there would only be a few manufacturers left in the market.