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FG’s tax increases for tobacco, alcohol draw praise, criticism

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Critics of the federal government’s increase on alcohol and cigarettes taxes on Monday argued the hikes could hurt the nation’s small businesses and economy.

The tax that drew the most criticism Wednesday was the hike on beer, wine and spirits. Most distributors, brewery owners and liquor store owners criticized the tax increase.

“Prices will go up. Of this, there is no doubt,” said Mr. Simeon Ofodile, owner of Exclusive Liquor, “When prices go up, sales go down.”

Speaking to Per Second News, representatives of some breweries, said the tax increase would harm a budding industry.

Business organizations say the imposition of new taxes could be impediments to business growth and economic development efforts. .

“This tax would directly, negatively affect my ability to expand, to hire more people,” said  Mrs. Seun Onimole,  owner of S&M, owner Distributors in Lagos.

“I don’t think it’ll change our business too much because people will pay more money just for the convenience,” said Mohammed Danlami, a tobacco trader.

Until now, Nigeria had one of the lowest tobacco, alcohol taxes in Africa.

Meanwhile, health officials are lobbying for an even higher tax increase for cigarettes, saying it could do more to discourage teens from starting smoking and encourage others to quit.

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 N1 specific rate (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.
Here are the new increase for alcohol:  Beer will attract N0.30k per centilitre in 2018 and N0.35k per centilitre in 2019 and 2020.Wines will attract N1.25k per centilitre in 2018 and N1.50k per centilitre in 2019 and 2020, while N1.50k per centilitre has been approved for spirits in 2018, N1.75k per centilitre in 2019 and N2.00k per centilitre in 2020.

Meanwhile, the finance minister disclosed that the new excise duty regime followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders.

According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco is 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.

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