Nige­ria’s ex­cise du­ties on to­bacco, al­co­hol very low – IMF

The Punch - - BUSINESS & ECONOMY - Ifeanyi Onuba, Abuja

THE In­ter­na­tional Mon­e­tary Fund has said that the ex­cise du­ties be­ing charged by the Fed­eral Gov­ern­ment on to­bacco and al­co­hol are very low.

The Fund said this in its 2017 mis­sion re­port, a copy of which was sighted by our cor­re­spon­dent on Tues­day in Abuja.

It stated that there was a need for Nige­ria to raise the ex­cise duty on a stick cig­a­rette to N5 as a fail­proof rev­enue rais­ing strat­egy.

This is five times higher than the N1 ex­cise duty ap­proval given by Pres­i­dent Muham­madu Buhari, which was an­nounced on Sun­day by the Min­is­ter of Fi­nance, Mrs. Kemi Adeo­sun.

Un­der the newly ap­proved rates for to­bacco, which take ef­fect from June 4, each stick of cig­a­rette will at­tract a N1 spe­cific rate (N20 per pack of 20 sticks) in 2018.

For 2019, the sum of N2 spe­cific rate will be charged per stick (N40 per pack of 20 sticks), while 2019 will have N2.90k spe­cific rate per stick (N58 per pack of 20 sticks).

But the Fund stated in the re­port that to­bacco prices should be ad­justed up­wards in con­form­ity with the global to­bacco con­ven­tion goal of achiev­ing an ex­cise bur­den of 64 per cent of the re­tail price per pack of 20 cig­a­rettes.

The IMF also rec­om­mended that ex­cise du­ties should be con­verted from ad-val­orem to spe­cific rates to re­flect the ex­ter­nal cost of con­sump­tion and pro­duc­tion.

It said, “Nige­ria’s to­bacco ex­cise du­ties are very low at 16 per cent of the re­tail price since ex­cise du­ties are gen­er­ally shifted for­ward into con­sumer prices; by ex­ten­sion, cig­a­rette re­tail prices in Nige­ria are only a frac­tion of the re­tail prices.

“To re­flect the fact that to­bacco ex­cise is a proxy for the so­cial cost that smok­ers im­pose on other peo­ple, it is rec­om­mended that the duty should be made spe­cific and im­posed at N100 per pack of cig­a­rette of 20 over a three-year pe­riod.”

For al­co­holic bev­er­ages, the Fund said that the cur­rent rate of 20 per cent was low.

This, ac­cord­ing to the IMF, does not ac­count for the ex­ter­nal costs that abu­sive drinkers im­pose on other peo­ple.

The Fund stated that chronic heavy drink­ing had a harm­ful ef­fect on the health sys­tem such as organ dam­age and birth de­fects.

It said stud­ies had shown that abu­sive drinkers were the cause of ac­ci­dents and do­mes­tic vi­o­lence.

It added that the World Health Or­gan­i­sa­tion had pro­vided ev­i­dence that in most coun­tries, ex­ces­sive con­sump­tion of al­co­holic bev­er­ages was re­spon­si­ble for up to 10 per cent of the to­tal dis­ease bur­den.

The re­port added, “The du­ties on al­co­hol and al­co­hol bev­er­ages in Nige­ria are low com­pared to those found in other coun­tries. Ex­cise du­ties of beer in Nige­ria are 2/5 of the duty in Kenya and one and a half of the level in South Africa.

“The low tax level pre­vails even though Nige­ria is the high­est al­co­hol drink­ing coun­try in Africa and leads the top 10 largest beer drink­ing coun­tries.”

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.