• Thursday, June 13, 2024
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NLC rejects excise tax on non-alcoholic drinks

Why the NLC’s tactics hurt more than they help – Part 2

The Nigeria Labour Congress (NLC) has rejected the Federal Government’s imposition of excise tax on locally produced carbonated and sugary drinks, as the beverage sub-sector will lose 40 percent of its current sales revenue which translates to about N1.9 trillion.

According to the NLC in a statement signed by Ayuba Wabba, its president, the tax (which is N10 on every litre of non-alcoholic drink) will also lead to an increase in the prices of carbonated drinks, a development that will drive the mass of Nigerians to seek sub-standard alternatives with dire implications for their health.

“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 NLC argued that its appeal to the government to rescind the introduction of the tax on non-alcoholic 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 the government.

Read also: Enough of talk, solve problems, NLC tells Buhari

It said: “While the government will only make total projected revenue of N81 billion from re-introduction of the excise duties, it (government) also stands to lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of the expected downturn in overall industry performance should the tax be effected as planned.

“In light of the foregoing, we ask the National Assembly to quickly amend the sections of the Finance Act 2022 that re-introduced excise duties on non-alcoholic and carbonated drinks. We also ask the 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.

“We demand that the government should engage employers in the sub-sector and organised labour in sincere discussions on other options that can deliver a mutually satisfying win-win solution on this issue.

We hope that the current situation will not be allowed to degenerate into a breakdown in industrial relations in the sector and generally in the country,” the NLC said.

President Muhammadu on December 31, 2021, signed into law the Finance Act 2022. Some of the provisions of the Finance Act include the imposition of excise duties on locally produced non-alcoholic, carbonated, and sugary drinks.

Apart from seeking to earn more revenue, the Nigerian government, in imposition the tax, argued that it would discourage the consumption of sugar by Nigerians, as soft drinks have contributed to an upsurge in cases of obesity and diabetes in the country.