The Federal government has signed-off on the implementation of a new excise duty regime on alcoholic beverages and tobacco products as it seeks to raise government’s fiscal revenues.

President Muhammadu Buhari has approved an amendment to the excise tariff rates for alcoholic beverages and tobacco products which are slated to go into effect on 4th June 2018, the Minister of Finance, Mrs. Kemi Adeosun said on Sunday.

In a statement, Adeosun said the President has granted a grace period of 90-days to manufacturers of the affected products before the new duty regime goes into effect.

She said the new excise duty rates would spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.

The minister revealed that the new tariff regime came about following an all-inclusive meeting between the Tariff Technical Committee of the Federal Ministry of Finance and key industry stakeholders.

She said that the upward review of the excise duties was meant to raise government revenues and to reduce the health hazard associated with tobacco-related diseases and alcohol abuse.

Adeosun said the new duty rate on tobacco was a combination of the existing ad-valorem base rate and specific rate, while the ad-valorem rate was replaced with a specific rate for alcoholic beverages.

“For alcoholic beverages, the current ad-valorem rate will be replaced with specific rates and spread over three years to moderate the impact on prices.

“This will curb the discretion in the Unit Cost Analysis for determining the ad-valorem rate and prevent revenue leakages.

“For tobacco, the government will maintain the current ad-valorem rate of 20 per cent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices,’’ Adeosun said.

She noted that the new tobacco excise duty rate will attract one naira specific rate per stick, which translates to ₦20 per pack of 20 sticks of cigarettes plus a 20% ad-valorem rate in 2018.

In 2019, the duties for tobacco will go up to ₦2 per stick of cigarette, which translates to ₦40 per pack of 20 sticks and ₦2.90 kobo specific rate per stick, which adds up to ₦58 per pack of 20 sticks in 2020.

The minister explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2% of the price of the most sold brand as against 38.14% in Algeria, 36.52% in South Africa and 30% in Gambia.

She said that the new excise duty rate for alcoholic beverages will affect beers and stout as well as wines and spirits for the three years 2018 to 2020.

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.

The Finance Minister said that the new tariff regime were in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of Member-States Legislation on Excise Duties.

The ECOWAS Council of Ministers had at its 62nd and 79th Ordinary Sessions in Abuja in May 2009 and December 2017, issued directives on the harmonisation of the ECOWAS Member States’ Legislations on Excise Duties.

The directives seek to harmonise member-states’ legislations on excise duties of non-oil products and also stipulate the scope of application, rate of taxation, taxable event and amount.