• Sunday, June 16, 2024
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NECA urges FG to suspend excise duty on carbonated drinks

Experts commend government for suspending proposed increases in excise duty rates

The Nigeria Employers’ Consultatice Association (NECA) has called on the Federal Government not to go ahead with the implementation of the just-introduced excise duty on soft drinks contained in the Finance Act 2021.

NECA said the tax if implemented would lead to job losses, increased industrials actions and further compound Nigeria’s unemployment rate.

“Among the concerns noticeable in the Finance Act is the planned re-introduction of excise duty on carbonated drinks.

We may recall that in 2009 during the global financial crisis, excise duties on carbonated drinks were suspended to aid the sustainability of businesses.

We make bold to say that the economic situation which necessitated the suspension of the excise in 2009 has not abated, but rather, worse. In fact, businesses currently face greater hardship than what obtained in 2009.

Thus, the introduction of the tax will be counter-productive as it will lead to further stifling of businesses in the manufacturing industry. It will result in reduction of the purchasing power of the masses as any increase in price will likely be passed to the consumers,” NECA warned in a statement on Sunday.

Read also: Nigeria’s $1.4bn soft drink market to slow on Excise Tax

It argued that at a time like this, governments globally were providing incentives for industries in order to speed up recovery from the shocks of COVID-19 pandemic, inflation and escalating costs.

It pointed out that Nigeria cannot afford to be doing the exact opposite as manufacturers, across all product segments need a respite, especially in the light of the unprecedented increase in production and operating costs.

“It is instructive to note, that manufacturers in the country have been contending with the dislocations caused by the pandemic and the recession that followed. They are also facing serious crises resulting from liquidity challenges in the foreign exchange market, which is impacting adversely on the cost of production, sales, turnover, profitability and shareholder value. In addition, they are confronted with intense pressure arising from numerous structural bottlenecks that are creating sustainability challenges for investors, especially those in the SME segment.”

It said there were concerns with the significant spike in cost of raw materials, investment capital, high import duty, energy, transportation and logistics/shipping among others.

“It is imperative that government, in the interest of Nigerians and the economy, should suspend the reintroduction of excise duty on carbonated drinks. Rather, the government should continue to support and promote the industry to attain full recovery after the onslaught of the pandemic and position it to further accommodate the teeming unemployed Nigerians, particularly the youths,” the employers’ body said.