VAT increase will hurt businesses, consumers – Guinness Nigeria

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Guinness Nigeria Plc has said that the ongoing plans by the Federal Government to raise the Value Added Tax (VAT) rate from 5% to 7.5% would have a negative effect on businesses in the country.

The company made this known when its chairman, Mr. Babatunde Savage spoke at the company’s 2019 Annual General Meeting in Abuja recently. He said that a VAT increase would negatively impact manufacturing firms in the country, increase the cost of doing business and further reduce the disposable income of Nigerians.

Savage also declared that Nigeria still remained a challenging environment to conduct business with the glaring absence of critical infrastructures, such as good roads, reliable power supply, and a good transportation system among others.

“This lack of infrastructure is epitomized by the continued gridlock at the Lagos ports which has constrained access to the port and getting out imported raw materials and finished products, as well as serious constraints for export,” he said.

“In addition, there is growing insecurity in various parts of the country, which has contributed to the challenging business environment and continues to be a major threat to the economic and political stability of the country.”

He lamented that the infrastructural deficit has increased the cost of doing business, reduced consumer purchasing power and led to higher rate of poverty in the country.

Savage said that the pressure on consumer disposable income was reflected on the poor financial performance of many companies in the country.

He called for the elimination of multiple taxes, adding that for strategic reasons, Guinness might not be able to transfer the effect of an increase in taxes, such as the excise duties to customers.

“You can see the way the economy is and the purchasing power of individuals. Sometimes it is difficult for businesses to pass on all the cost. If they do that, it brings about an increase in the price of their products and their volume would go down sharply and even the result would be worse than what we see.”

The Chairman said that despite challenges in the business environment and the intense competition in the brewing industry, the company remained profitable in 2019 and is determined in its commitment to improve on its performance and deliver greater returns on investment for its shareholders.

Also speaking, Managing Director/Chief Executive Officer of Guinness Nigeria, Mr. Baker Magunda, said the company would continue to invest in its operations, adopt innovative processes and guarantee consistent returns to its shareholders.

He said that the company was promoting local content in its production, adding that its use of local content has reached 70% and was seeking to improve on it.

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