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Nigeria Can Generate N600bn From Excise Duty On Tobacco, Alcohol, Says World Bank

Oluwasina Phillip

The World Bank has said that Nigeria can grow its revenue significantly and generate N600bn annually by increasing the excise duties on tobacco and alcohol as recommended in the National Development Update report.

A Senior Tax Specialist of the bank, Rajul Awasthi, disclosed this on Thursday at a virtual discussion on domestic revenue mobilisation.

Awasthi stated that Nigeria has one of the lowest excise duty rate on tobacco and alcohol in Africa, adding that Nigeria’s duty rate on cigarettes is lower than the standard set by the Economic Community of West African States.

He, therefore, advised the Federal Government to either adopt the excise standards for tobacco and alcohol recommended by the ECOWAS or Kenya to boost the country’s revenue from tax.

He added that this type of tax increase will not impact the majority of the population or low income earners but improve the ease of tax compliance monitoring.

“On excise, what we see is that Nigeria has one of the lowest excise rates on alcohol and cigarettes, on cigarettes, they are even lower on the ECOWAS target.

“So, if Nigeria were to adopt the same rate of excise duty that Kenya has adopted, they can raise significant amount of revenue.

“Similarly, if they are to adopt EOWAS, standard, that will also raise the revue significantly, what is more important is that this two sources will not impinge on consumption growth, in fact these harm goods, so taxing them is actually good from the health perspective.

“Excises on tobacco and alcohol, do not impact the vast majority of people and compliance can be monitored much more easily by the compliance agencies.

“If the measures outlined in our report are implemented, these excise duty on tobacco and alcohol can raise more that N600bn a year.”

He further advised the FG to embrace tax policies that does not endanger investments, jobs or the growth of the economy.

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