FG mulls tariff increase on alcohol, cigarettes

The Minister of Finance, Mrs. Kemi Adeosun has recommended increasing excise duty rates on alcohol and tobacco products with implications on their health effects as well as a means of raising revenue.

Adeosun added that her recommendation is in line with the implementation of the ECOWAS common External Tariff (CET), one of the instruments of harmonizing member states to strengthen its Common Market agreed upon on 25th October 2014.

In a memo sent to President Muhammadu Buhari and seen by TheCable, a local news source, the Finance Minister laid-out a proposal for a two-part tariff to be levied on tobacco products.

A two-part levy imposes two types of excise duty on the same product.

Adeosun recommended a 20% “ad valorem” tariff and a N1 per stick tariff to be placed on cigarettes and tobacco products.

Ad valorem tariff is levied as a fixed percentage of the value of a commodity.

She also recommended a 35 kobo per CL be placed on beer and stout, N1.50k per CL on wines, and N2 per CL on spirits and other alcoholic beverages.

According to the minister, this was a recommendation made by the Tariff Technical Committee (TTC), which is chaired by the Ministry of Finance with members from ministries of industry, agriculture, Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Office of the Secretary to the Government and Manufacturers Association of Nigeria (MAN).

“Further to the request, the chief of staff to Mr. President requested for my views on the matter. As a result of this, the TTC deliberated on the subject and recommended for an upward review of excise rate on tobacco and alcohol, taking into consideration their health implications and revenue potential,” she wrote.

“In addition, it also recommended the introduction of a specific rate of excise on alcohol including beers and a mixture of ad valorem and specific rate excise structure on tobacco products in ECOWAS member states.

“In line with the recommendations of the TTC, I wrote and requested your Excellency’s consideration and approval for the proposed revised rates of excise on alcohol and tobacco, vide letters: FMF/OHMF/TA/1/2017, dated October 30, 2017 and FMF/PHMF/ALCOHOL/1/2017, dated November 8, 2017.”

In November, the Finance Minister informed the ECOWAS Financial Council of Ministers that the federal government was working on policies to increase taxes on tobacco and alcohol.

In 2017, the World Health Organisation (WHO) called for increased taxes on tobacco products to discourage its use.

Nigerians smoke about 20 billion sticks of cigarette yearly, according to Isaac Adewole, Minister of Health.

Nigeria is also said to be a big consumer of alcoholic beverages in the world.

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