Federal Government urged to suspend new excise duty rate on alcohol, tobacco – Senate

The Senate on Tuesday sought the assistance of the Federal Government to halt the implementation of a new excise duty rate on alcohol and tobacco that came into effect in June until all relevant stakeholders are adequately consulted.

The Upper legislative chamber said a pause would give all stakeholders in the beverage and tobacco industries an opportunity to agree on a consensus rate and implementation approach.

The senate also asked the federal government to sensitize both producers and consumers of alcoholic beverages and tobacco products to understand why there was a need to increase the tariff rates so as to help boost government revenue and provide additional resources to government to invest in the country’s healthcare system.

The recommendations followed the adoption of the report of the Senate Committee on Finance on the Urgent Need to Review the Excise Tariff Increment in order to save Local Distillers of Beverages from Looming Extinction.

The senate in May mandated its Committee on Finance to organise unfettered discourse between the Federal Government and relevant stakeholders on the matter following a motion on the floor of the senate.

In June, the Federal Government brought a new excise duty rate for alcoholic beverages and tobacco in force following President Muhammadu Buhari’s approval of the amendment to the excise duty rates in March.

The former Minister of Finance, Kemi Adeosun, had said 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 affected products.

Under the new rate, beer and stout will attract .30 kobo per centilitre in 2018 and .35 kobo per cl each in 2019 and 2020. Wines will be levied with ₦1.25k per cl in 2018 and ₦1.50k per cl each in 2019 and 2020, while ₦1.50k per cl was approved for spirits in 2018, ₦1.75k per cl in 2019 and ₦2 per cl in 2020.

Adeosun stated that the new excise duty regime followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders.

In a report presented by the Vice Chairman of the Senate Committee, Umaru Kurfi (APC, Katsina State), the panel observed that most industry players in the beverage and tobacco industries were not properly engaged during the consultative process that led to the adoption of the new excise tariff rate.

In its recommendations, the committee pushed for an upward review of not more than 50% Excise Tariff increment on alcoholic beverages and tobacco.

“An increment of not more than 50% at maximum should be adopted, as it becomes necessary for the Federal Government to increase the tariff rate in order to boost revenue generation as the rate will provide more leniency to the affected manufactures and give more hope for the survival of the indigenous companies,” the panel said.

“There is the need to increase the import duties of foreign alcoholic beverages and tobacco products in order to give local indigenous companies more competitive edge as this will provide for a less price differentiation”.

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