BusinessDay

Review of tobacco tax puts Nigeria closer to treaty compliance

Sonny Kuku, president, Nigeria NCD Alliance has said that the recent review of tobacco and alcohol taxes has put Nigeria in better position to comply with the World Health Organisation Framework Convention on Tobacco Control (WHO/ FCTC) guideline.

 

 “The increase (tax rate) demonstrates the commitment of the Federal Government of Nigeria to meeting its treaty obligations under the World Health Organisation Framework Convention on Tobacco Control (WHO/ FCTC), particularly, Article 6, which seeks to use taxation as a measure to reduce the demand for tobacco products,” said Kuku.

 

 It would be recalled that, Federal Government on March 4, approved increase on excise duty for alcohol beverages and tobacco, which it said would take effect from June 4, 2018.

 

 Under the newly approved excise duty rates for tobacco in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

 

 Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia.


Following the upward review of the excise duty rates for alcoholic beverages and tobacco by the country was to achieve a dual benefit of raising the Government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.


“We encourage the government to continue the effort to bring the tax structure on cigarettes in line with the established global best practice, and recommendations of the FCTC and also to move ahead with plans for the full implementation of the National Tobacco Control Act 2015 and other subsidiary tobacco control legislations, in order to protect our citizens from the devastating health and economic consequences of tobacco use,” Kuku said.

 

The NCD commended the minister of health, Adewole Isaac for facilitating an increase in the excise tax on tobacco and alcohol, which are known to lead to increased risk of developing NCDs including diabetes, cancer, heart disease and chronic obstructive diseases of lungs 

 

The group further said that experience from many countries has shown that increasing taxes assist in mitigating the tremendous cost of the health burden of tobacco use, encourage smokers to quit and other never to start, and most importantly makes the product less affordable to the youth.

 

Article 6 of the FCTC recognizes that price and tax measures are an effective and important means of reducing tobacco consumption. The treaty requires that Parties consider tax and prices polices as a part of their overall national health objectives and adopt tax policies to contribute to these objectives aimed at reducing tobacco consumption.


It urges governments to implement the simplest, most efficient excise tax system to meet health and fiscal needs, make tobacco products less affordable over time, adjusting taxes regularly for inflation and income growth.

 

Governments were also mandated to establish coherent long-term tax policies in order to achieve their health and fiscal objectives.


“Tax all tobacco products in comparable ways and ensure systems are designed to minimize incentives for users to shift to cheaper products. Design tax administration system to collect taxes efficiently and effectively. Consider dedicating revenue to tobacco control programs. Tobacco taxes can provide a source of funding for tobacco control,” says the document.

Get real time updates directly on you device, subscribe now.