carbonated drinks

N10/Litre Excise Duty on Carbonated Drinks Rejected By NLC

The Nigeria Labour Congress, NLC, has urged President Muhammadu Buhari and the leadership of the two houses of the National Assembly to halt the reintroduction of excise levies on locally made non-alcoholic carbonated beverages.

Congress highlighted a variety of compelling reasons why the government should not forward with its intention to levy new taxes on soft beverages.

One of the arguments stated by the labor union is that reintroducing excise duty on non-alcoholic, carbonated, and sugary beverages will inflict enormous hardship on ordinary Nigerians who can easily put hunger at bay with a bottle of soft drink and maybe a piece of bread.

The main fear of the NLC is the widespread hunger that would arise from even a small increase in the retail price of soft drinks due to the implementation of excise charges since the product would be priced out of reach for millions of ordinary and impoverished Nigerians.

According to the NLC, they were also alerted by the complaint of Nigerian soft drink manufacturers that the reintroduction of excise duties on their products would result in a sharp decline in sales, forced reduction in production, and a certain roll back in investments with the certainty of job losses and possibly the closure of their manufacturing plants.

The NLC observed that this was also a criticism of tyre manufacturing businesses like Dunlop and Michelin, which the government ignored until the two corporations migrated to neighboring Ghana. A similar scenario is unfolding in the soft drink manufacturing sub-sector. The government should take notice.

The food and beverage industry is our country’s largest industrial sub-sector, accounting for 38 percent of total manufacturing production and 22.5 percent of total manufacturing sector share. In the last five years, the food and beverage sub-sector has contributed N202 billion to government coffers through VAT, N7.3 billion through Corporate Social Responsibility, and has, directly and indirectly, produced 1.5 million quality employment. As a result, there is no disputing the reality.

The Congress maintained that the government’s health justification for reintroducing excise levies seems charitable.

They do, however, ask why the government did not levy excise charges on sugar as a commodity rather than on fizzy beverages.

On December 31, 2021, President Muhammadu Buhari signed the Finance Act 2022 into law. One of the requirements of the Finance Act is the application of excise duty on domestically manufactured non-alcoholic, carbonated, and sugary drinks.

The government stated that this decision was made to dissuade Nigerians from consuming sugar since the government maintains that soft drinks have led to an increase in cases of obesity and diabetes in Nigeria.

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