COMMENTS ON GOVERNMENT’S PLAN TO IMPOSE/INCREASE EXCISE DUTY RATES ON LOCALLY PRODUCED GOODS
The government recently commenced the enforcement of the approved amendment to the excise duty rates for alcoholic beverages, spirits and tobacco in Nigeria. However, we are worried over the move to extend the duty to cover several other basic items. For instance, the Nigerian Customs Service (NCS) excise duty list on its website is inclusive of many basic and essential products such as: soap and detergent; toilet papers, cleansing or facial tissue; and Spaghetti/Noodles. These are products consumed largely by ordinary Nigerians. Any imposition of excise duty on these products would further aggravate the poverty situation in the country and undermine the welfare of citizens. Already poverty incidence is well over 60 % in the country.
It is also instructive that food inflation is still of great concern. The National Bureau of Statistics reported that it was 13.45% in May 2018, as against the core inflation of 10.7%, and headline inflation of 11.6%. Imposition of excise duty on basic items may aggravate the poverty condition in the country. Soaps and detergents for instance are necessities, needed to maintain basic hygiene that protect citizens from preventable diseases like diarrhea, cholera, lower respiratory infections amongst others. These have significant health and social impact on Nigerians.
The planned extension of excise duty to cover soaps and detergent will invariably increase their prices, make them inaccessible for the common man, and further heighten their plight amidst the current economic challenges that has reduced their purchasing power. Besides, imposing or increasing excise duty rates penalizes domestic production and incentivizes importation which conflicts with the vision of the Economic Recovery and Growth Plan [ERGP] regarding economic diversification, job creation and local value addition.
Presently, one of the most vulnerable sectors in the Nigerian economy is the manufacturing sector. Already, the sector is grappling with high operating cost, high energy cost, weak purchasing power of consumers, unfriendly tax environment, high regulatory compliance cost, influx of smuggled products and high cost of logistics. If the government cannot give tax incentives to manufacturing firms, it should not impose additional tax burden on them, given the challenging operating environment for production in the economy. It is even worse when such burden is on necessities consumed largely by the ordinary people. We therefore request an urgent rethink of the proposition to increase or impose excise duty on the production of basic needs in the economy.
LAGOS CHAMBER OF COMMERCE AND INDUSTRY[LCCI]