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Sugar tax: Manufacturers urge FG to revisit N10/litre excise policy

...Worry as 1.5 million jobs could be lost

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THE Manufacturers Association of Nigeria (MAN) has kicked against the Federal Government’s decision to tax carbonated drinks.

The announcement of the new tax regime was made a week ago to discourage excessive consumption of sugar in beverages, according to the government.

But it is basically a means of raising revenue for government projects.

Director-General of MAN Segun Ajayi-Kadir said this was not the best time to introduce the tax, noting that it could hurt 1.5 million jobs.

In an interview with Television Continental (TVC) on Tuesday, Ajayi-Kadir said, “We felt that is not a time for you to introduce this excise duty which obviously would affect the business of the most promising sector in the manufacturing industry.


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“We know, for instance, that the food and beverage sub-sector contributes about 38 per cent of the manufacturing contribution to Gross Domestic Product (GDP) and 22.5 per cent of the jobs created, employing 1.5 million persons. We have a feeling that this is the kind of sector we need to guide against any negative thing falling there.

“We see that in the long run, the introduction of this excise duty will not augur well for revenue for government and performance for the sector. The way it hit us, we are looking at a situation where it ought to be revisited with adequate dialogue and then we can find a common ground.”

Segun Ajayi-Kadir, DG of MAN
Segun Ajayi-Kadir, DG of MAN
Photo Credit: www.manufacturersnigeria.org

Ajayi-Kadir said the policy was ‘pennywise and pound foolish’ as it abandoned a recent research the body conducted on the introduction of a tax on soft drinks.

He said, “It is what has been described by some who have commented on it as ‘pennywise and pound foolish’ in a sense. If you look at a revenue gain of N81 billion between 2022 and 2025, you compare this with a possible revenue loss of N142 billion in Value Added Tax (VAT) and N54 billion in Company Income Tax (CIT) over this period, I think it would be a better idea to actually allow the sector to continue on its growth pathways.

“I also indicated that part of that study revealed that there would be a contraction of 0.43 per cent in terms of output from the sector. When you take this over a period of five years, it is going to lead to a 40 per cent drop in industry revenue. When you do this calculation, it wouldn’t be hard to accept our predictions.”

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The MAN boss tasked the government to seek more revenue by expanding the tax base. He said the body would be ready to offer expertise on how to expand the tax net so manufacturers could survive and retain their return on investment.

Ajayi-Kadir urged for stakeholder engagement as he noted that manufacturers might suffer another duty on dairy products and alcoholic beverages.

He further stated that he was not aware of how consumption of soft drinks would affect health concerns as he was yet to see evidence of that from the government, highlighting the fact that some producers were engaged in zero sugar carbonated drinks.

Experienced Business reporter seeking the truth and upholding justice. Email tips to [email protected]

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