Leading experts in tax, fiscal policy and economics have commended the federal government on its recent indication to suspend the proposed increases in excise duty rates on tobacco, alcoholic and non-alcoholic beverages as part of the 2023 Fiscal Policy Measures and Tariff Amendments.
A leading tax and fiscal policy expert and Head, Tax and Fiscal Policy at PricewaterhouseCoopers (PwC) Nigeria, Mr. Taiwo Oyedele, lauded the federal government for engaging with, and listening to the legitimate concerns raised by industry players and suspending the proposed increases in excise duty rates.
Speaking during an interview on Arise TV, Oyedele stated that government could not afford to implement an excise rate hike as doing so would not only worsen the current ailing condition of the manufacturing sector but inflict more economic hardship on the people.
“Glad to hear that the government is no longer going ahead with the proposed increases, it is great that the government, through the Federal Ministry of Finance and the Fiscal Policy Reform Committee (FPRC), is yielding to the clamour of experts and industry stakeholders.
“I recommend a more collaborative and evidence-driven approach going forward for future changes,” he said.
Oyedele noted that given that the government had earlier in 2022 approved excise duty rates for 2022 to 2024, with various increases up to 95% in some instances, further increasing the rates outside the established roadmap would have adverse effects not only on the manufacturing sector but impact the economy negatively.”
Also, a development economist, Kunle Oshobi, advised the federal government against the proposed increases in excise duty rates for 2023-2024 as the measure could amount to policy inconsistency capable of causing distrust in the economy, investors’ wariness, and upend planned private investment.
He specifically cited the fragile outlook of the beer sector in Nigeria despite the longstanding investments in the value chain as a cause for great concern.
Oshobi stated that it was wrong for the government to add additional pain to a burdened sector striving for a rebound.
The proposal, if implemented on assumptions without recourse to data, according to him, could precipitate further challenges in an already volatile business environment.
Another economist and policy analyst, Mr. Osas Akinbo, said increasing excise duty on beverages in this prevailing economic condition would undoubtedly put severe strain on consumers and manufacturers of beverages.
He said data from the industry has proven that demand for beverage products is not inelastic.
Akinbo stated that a further increase in excise duty would most likely have a net negative effect on sustainable government revenue, national GDP, and the corporate image of Nigeria, thus leading to erosion of investor confidence in a market already marred by volatility.
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