Smokers To Pay More As New Alcohol, Tobacco Excise Duty Begins Monday

The new excise duty for alcoholic beverages and tobacco earlier

approved by President Muhammadu Buhari will take effect from Monday,

June 4, 2018, says the Federal Government.

 

The Minister of Finance, Mrs Kemi Adeosun, in March announced that the

President Buhari had granted a grace period of 90 days to manufacturers of

the products.

 

Adeosun 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.

 

According to her, the upward review of the excise duty rates for

alcoholic beverages and tobacco was to raise the government’s fiscal

revenues.

 

She said that it would also reduce the health hazards 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.

 

She said that under the new rates for tobacco, in addition to the 20

per cent ad-valorem rate, each stick of cigarette will attract one

naira specific rate per stick; that is N20 per pack of 20 sticks in

2018.

 

She said that in 2019, tobacco will attract two naira specific rate

per stick or N40 per pack of 20 sticks.

 

The minister said that by 2020, tobacco would begin to attract N2.90

kobo specific rate per stick or N58 per pack of 20 sticks.

 

Adeosun explained that Nigeria’s cumulative specific excise duty rate

for tobacco was 23.2 per cent of the price of the most sold brand.

This is as against 38.14 per cent in Algeria, 36.52 per cent in South

Africa and 30 per cent in Gambia.

 

She said also that the new specific excise duty rate for alcoholic

beverages cut across beer and stout, wines and spirits for the three

years, 2018 to 2020.

 

Under the new regime, beer and stout will attract 0.30k per centilitre

(Cl) in 2018 and 0.35k per Cl each in 2019 and 2020.

 

Wines will attract N1.25k per Cl in 2018 and N1.50k per Cl each in

2019 and 2020, while N1.50k per Cl was approved for spirits in 2018,

N1.75k per Cl in 2019 and N2 per Cl in 2020.

 

The Director-General, Consumer Protection Council (CPC), Mr Babatunde

Irukera, said the decision to increase the excise duty on these

commodities was consistent with prevailing global practices.

 

He said he was convinced government’s approach would foster consumer

confidence, provide regulatory clarity and prioritise safety, to

reinforce the mandate of the council.

 

The Deputy Executive Director, Environmental

Rights Action of Earth Nigeria, Akinbode Oluwafemi, described the decision to increase

excise duty on tobacco as praise-worthy.

 

“We applaud the federal government for making tobacco products priced

beyond the reach of our kids and the poor who are unfortunately

targeted by the tobacco industry through their cheap but lethal

products.

 

“Considering the looming tobacco menace in Nigeria, it is necessary to

take stringent measures to halt the deliberate marketing of tobacco

products to kids,” Oluwafemi said.

 

However, the President, Manufacturers Association of Nigeria, Dr Frank

Jacobs, expressed fear that the proposed hike may lead to close of

factories and loss of jobs in the country.

 

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.

 

Similarly, the International Monetary Fund (IMF) in its 2017 mission

report advised Nigeria to raise the excise duty on a stick cigarette

to N5, which is five times the approved amount.

 

“The low tax level prevails even though Nigeria is the highest alcohol

drinking country in Africa and leads the top 10 largest beer drinking

countries,” the Fund said.

 

The new rates also fall short of the more aggressive recommendations

of the World Health Organisation (WHO) in Article 6 of the Framework

Convention on Tobacco Control (FCTC), which suggests 70 per cent

excise on tobacco products.