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NLC Describes Tax On Carbonated Drinks As Insensitive, Predatory

The Nigeria Labour Congress has rejected the imposition of excise duties (indirect tax) on locally-produced carbonated drinks in Nigeria, describing the move as insensitive and strangulating on the masses.

The NLC President, Mr Wabba Ayuba in a statement noted that the health reason proffered by the government as reason for the reintroduction of the excise duties seems altruistic, wondering why the government did not place the excise duties on sugar itself as a commodity rather than on carbonated drinks.

“The truth of the matter is that an additional increase in the retail price of carbonated drinks would put more Nigerians at risk of serious health challenges as many people would resort to consuming sub-standard and unhygienic drinks as substitutes for carbonated drinks.

“The appeal to rescind the reintroduction of excise duties on nonalcoholic drinks becomes even more compelling when the projected immediate revenue expected from the policy is weighed against the potential long-term loss to both manufacturers and government. The beverage subsector will lose 40 per cent of its current sales revenue.

“This translates to a loss of N1.9 trillion. While the government will only make a total projected receipts of N81 billion from the proposed reintroduction of the excise duties. Government also stands to lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of expected downturn in overall industry performance should the excise duties be effected as being planned,” Wabba explained.

He urged the National Assembly to quickly amend the sections of the Finance Act that re-introduced excise duties on non-alcoholic and carbonated drinks, even as he asked asked government to extend COVID-19 palliatives and support incentives to the food and beverages industry to cushion the shock and haemorrhage that the industry is trying to recover from. The NLC President also called on the government to engage employers in the sub-sector and Organized Labour in sincere discussions on other options that can deliver a mutually satisfying win-win solution to this issue.

Wabba also recalled the litany of com- plaints of manufacturers of soft drinks in Nigeria that the re-introduction of excise duties would lead to very sharp decline in sales, forced reduction in production capacity, and a certain roll back in investments with the certainty of job losses and possibly shut down of manufacturing plants.

“Nigerians would recall that this was also the complaint of tyre manufacturing companies such as Dunlop and Michelin which was overlooked by the government until the two companies relocated to neighbouring Ghana. A similar situation is playing out with the soft drinks manufacturing sub-sector. Government should pay attention.

“With 38 per cent of the entire manufacturing output in Nigeria and 22.5 per cent share representation of the entire manufacturing sector in Nigeria, the food and beverage industry is the largest industrial sub sector in our country.

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