Consumers of alcoholic beverages and tobacco products in the country will have to pay more soon.
The increase in the prices of the products will take effect from June 4, 2018.
This follows President Muhammadu Buhari’s approval of the amendment to the excise duty rates.
The essence of the action is to increase revenue generation by the government and at the same time, reduce the rate of consumption in view of the health hazards to come with the consumption.
According to a statement issued on Sunday by the Minister of Finance, Mrs. Kemi Adeosun, the rates will be spread over a period of three years.
This is to reduce the effect on the prices of the products affected.
The statement reads in part: “The Tariff Technical Committee (TCC) recommended the slight adjustment in the excise duty charges after cautious considerations of the government’s fiscal policy measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s fiscal policy.
“The effect of the excise duty rates adjustment on trade and investment was also assessed by the federal ministry of trade and investment and it adopted the recommendations of the TTC.
“Furthermore, peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages and tobacco.”
The statement explained that the new rates would be replaced with specific rates and spread over three years to moderate the impact on prices in the case of alcoholic drinks.
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That would curb the discretion in the unit cost analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages, the statement explained.
It added: “For tobacco, the government will maintain the current ad-valorem rate of 20 per cent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices.
“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, it was stated, 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.
With the new duty regime Nigeria will be operating within the directive from the Economic Community of West African States (ECOWAS) on the harmonisation of member-states’ legislation on excise duties.
