Nigerians will pay more for cigarettes, alcohol from today

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The consumers of alcoholic beverages and tobacco will from today (Monday) pay more for the products as the new excise duty rates approved by President Muhammadu Buhari in March come into effect.

The Minister of Finance, Mrs. Kemi Adeosun, disclosed this in Abuja on Sunday.


She explained that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.


 
The minister had stated in March that the President had granted a grace period of 90 days to all manufacturers before the commencement of the new excise duty regime in that sector of the economy. The grace period ended on Sunday.

Adeosun stated 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.

She noted that the upward review of the excise duty rates for alcoholic beverages and tobacco was 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.

She said, “The Tariff Technical Committee 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’s 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 Industry, 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.”

Following the President’s approval, Adeosun said that the new excise duty rate on tobacco was a combination of the existing ad-valorem-base rate and specific rates.

For alcoholic beverages, the minister added that the current ad-valorem rate would be replaced with specific rates and spread over three years to moderate the impact on prices.

This, she noted, would curb the discretion in the unit cost analysis for determining the ad-valorem rate and prevent revenue leakages.

Regarding tobacco, she noted that the government would maintain the current ad-valorem rate of 20 per cent.

Under the newly approved excise duty rates for tobacco, she said in addition to the 20 per cent ad-valorem rate, each stick of cigarette would attract a N1 specific rate (N20 per pack of 20 sticks) in 2018; a N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and a N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

The minister explained that Nigeria’s cumulative specific excise duty rate for tobacco 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.

The new specific excise duty rate for alcoholic beverages cuts across beer and stout, wines and spirits for the period 2018 to 2020.