The policy will also be inimical to the growth of the
manufacturing sector and the entire business community, MAN Director General,
Mr Segun Ajayi-Kadir, said in a statement on Tuesday in Lagos.
Ajayi-Kadir said MAN was especially concerned and was taken
by surprise by the increases in excise tax for 2023 and 2024 provisioned in the
policy because MAN had actively participated in its deliberations and presented
its positions on the measures.
Ajayi-Kadir also noted that meetings with government
informed the association that the 2023 proposals on additional excise tax
increases were being stepped down until further consultations on the 2023
Finance Bill.
He noted that Nigeria Customs Service was notified by
government that the existing fiscal policy measures for 2022 on alcoholic
beverages and tobacco products takes effect from June 1, 2023 and June 1, 2024
respectively.
“Based on that, manufacturers had finalised their annual
strategies and projections, while exporting members had concluded pricing
negotiations for orders to the end of that fiscal period.
“It is worrisome that the current situation is indicative of
inconsistency in government policy, given that industries that are affected by
excise tax administration, already made three year strategic plans based on the
agreed calendar.
“This, in our opinion, may create credibility issues for the
country with existing and potential investors, impacting Foreign Direct
Investments (FDI) and the country’s Ease of Doing Business index among other
implications.
“It is therefore alarming that the implementation of the
2022 to 2024 approved excise roadmap, as contained in the 2022 Fiscal Policy
(which commenced on June 1, 2022), has unfortunately not even been implemented
for up to one year, before government decides to ‘shift the goal post’.
“This was done without any consultation on or assessment of
the impact of the huge increases.
“In some cases, it is up to 50 per cent on ad valorem and 75
per cent on specific duty rates, over and above the already approved high increases
of up to 50 per cent and 45 per cent respectively,” he said.
Ajayi-Kadir said that data from the association revealed
that government was unlikely to earn more revenue from further excise increases
due to significant decline in sales by companies in the sector.
“We would like to put on record that the real impact on our
members in the industries under excise regime from the 2022 fiscal policy has
been negative.
“This has created reduced production volumes, increased
illicit trade in some of the affected products, erosion of members’ market
share and revenue.
“It also include inflation and increased security challenges
faced around the country and a lot more.
“All these are without regard to the industry’s contribution
to the Nigerian economy in the way of significant taxes being paid; taxes
include excise, corporate income tax, Value Added Tax (VAT), export revenue in
foreign currency and employment of thousands of Nigerians,” he said.
He, however, commended the Federal Government on some of the
approvals, provided for under the Supplementary Protection Measures (SPM) on
Annex I, II and III of the 2023 Fiscal Policy guidelines.
Ajayi-Kadir said the provision was in support of MAN agenda
of resource-based industrialisation.
In addition to the issue of excise tax increase, he appealed
that the green surcharge-import adjustment tax on motor vehicle and the single
use of plastic surcharge of 10 per cent be reconsidered.
He said the surcharge of 10 per cent on single use plastic
under HS Code 3919.10.00.00 and 3919.90.00.00 as well as Headings – 39.20;
39.21 and 39.23 (plastic containers, films and bags), appears ill-timed and
hasty.
He noted that was necessary because government was currently
working towards instituting a plastic cycle waste management policy with
technical assistance from the United Nations Industrial Organisation (UNIDO)
with support from the Japanese government.
“While we support and respect government’s opinion and
measures aimed at addressing climate change and Nigeria’s commitment to net
zero emission, it would have been better if we exercise some level of strategic
caution and allow for a period of realistic transition to clean energy.
“This is considering the fact that most of our members
engage logistics companies, majority of whom are in the Small and Medium-scale
Enterprise (SMEs) cadre, who would need some time to migrate to green fuel and
who lack the financial capacity to purchase electric vehicles.
“Anything short of this will increase the input cost of
products culminating in un-competitiveness as well as eliminating many SMEs in
the logistics downstream of the manufacturing sector.
“We, therefore, strongly recommend that government should
maintain the status quo regarding the already government-approved excise duty
increases on these items in the 3-year Roadmap as contained in the 2022 Fiscal
Policy Measures.
“The industry cannot afford any further increases at these
extremely challenging times,” he said. -NAN