CONFUSION is the word now on a possible hike in tobacco tax after a hint by the ministry of Health of implementation of a planned 50 per cent increase of the tax.
Some industry experts would rather ignore the Health ministry’s disclosure, arguing that the ministry of Finance, and not Health, is the government body empowered by the relevant Act to announce such fiscal policy issues.
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The Head of the Tobacco Control Unit, Non-communicable Disease Division, Federal Ministry of Health, Mangai Malau, had mentioned the planned tax increase on Tuesday April 18 at the National Tobacco Control Budget Advocates Meeting in Abuja.
Malau said jacking up tobacco tax was part of government’s effort to control smoking.
The Health ministry’s top official, in his paper, ‘Overview of Tobacco Control Funding/Budgeting in Nigeria: Why Tobacco Control Budgeting and Funding?’, said that funding for the control must come mostly from taxation, but added the need for relevant stakeholders to apply tax measures rightly if they would properly address the issue.
He stated, “In effectively controlling tobacco and tobacco products in Nigeria, funding is a critical component. The WHO Framework Convention on Tobacco Control recognises this and clearly stipulates it in Article 26.
“It states that parties shall provide financial support in respect of its national activities intended to achieve the objective of the Convention, in accordance with its national plans, priorities and programmes.”
Some industry stakeholders, arguing that the government must find a balance between enhanced revenue generation and dissuading addicted tobacco Nigerians, said a 50 per cent tax rise could discourage local tobacco producers and fuel smuggling. This, they maintained, could be counter-productive and rob the government of the expected revenue.
The ministry of Finance has not officially given its position on the 50 per cent tax hike, but the Manufacturers Association of Nigeria (MAN) had, after a visit to the ministry of Finance on April 5, said in an official statement issued by its director-general, Segun Kadir, that the tax hike on tobacco had been postponed.
Kadir actually applauded what he called the Federal government’s decision to halt the proposed increase in excise duty on alcohol, non-alcoholic beverages and tobacco, a position that would seem contrary to Malau’s statement.
MAN warned in the statement that a new tax imposed on carbonated drinks and others would be counter-productive, and that government should devise other means of generating revenue rather than stifling the productive sector, which is already gasping for breath.
A former director-general of the Lagos Chamber of Commerce and Industry (LCCI) and now executive director of the Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf, wondered how the policy statement on increase in tax on tobacco was coming from the ministry of Finance and not Health.
“There is an original schedule of increase on this with the Federal Ministry of Finance, which has not been officially announced. Policy statements like this should come from the Finance Ministry, not Health,” Yusuf told The ICIR.
According to him, the yet-to-be released fiscal policy document for 2023 that would give further policy direction on excise duty on tobacco and carbonated drinks from the ministry of Finance was not yet out.
“This is where there is a concern. We would have to wait for the fiscal policy document from the Finance ministry, which would give direction on a policy statement like this,” Yusuf said.
A development economist, Celestine Okeke, also called on the government to create balance between enhanced revenue generation and proper health advocacy on tobacco.
“In as much as the government is looking intensely for revenue, there must be proper lessons on how other economies have done it so we could learn,” Okeke said.
Malau pointed out that funding is a major provision of the National Tobacco Control Act, adding that Section 8 of the Act provides for the Tobacco Control Fund, which shall be used to fund tobacco control activities programmes and projects.
“Tobacco use and exposure to second-hand smokers is a leading cause of mortality, morbidity, disability, and impoverishment in the world,” he said.
He stressed that smoking is the greatest risk factor for non-communicable diseases like hypertension, stroke, cancer, diabetes and chronic obstructive pulmonary diseases.
“Accordingly, tobacco causes more than eight million deaths annually around the world, with more than seven million of those deaths as a result of direct tobacco use.
“And there are about 1.2 million resulting from non-smokers being exposed to second-hand smoke. Also, there is no safe level of exposure to tobacco smoke, and even a brief exposure can be harmful to one’s health,” he added.
The Nigerian government, concerned about the threat from tobacco usage, signed the World Health Organisation Convention on Tobacco Control (WHO FCTC) in 2004, which it ratified in 2005.
In 2015, the National Tobacco Control Act was enacted and its Regulations were passed in 2019.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.