*says action would result to mass hungerÂ
The Nigeria Labour Congress (NLC) has rejected the imposition of excise duties imposed on locally produced nonalcoholic, carbonated, and sugary drinks as contained in the Finance Act 2021, which was recently signed by President Muhammadu Buhari.
NLC in a statement by its President, Comrade Ayuba Wabba urged government to instead engage Employers in the subsector and Organized Labour to ensure that the situation will not degenerate into a breakdown in industrial relations in the sector and generally in the country.
Wabba said the reason offered by government for this decision was to discourage the consumption of sugar by Nigerians as it has led to upsurge in obesity and diabetes.
According to him, the NLC in a letter dated 27th November 2021, wrote to President Muhammadu Buhari, and the leadership of the two chambers of the National Assembly pleading that government should suspend the implementation of the excise duties on non-alcoholic, carbonated and sugary drinks.
He said, “the Congress provided a number of very cogent reason why government should not go ahead with the decision to impose fresh taxes on soft drinks.
“One of the reasons we advanced was that the re-introduction of excise duties on non-alcoholic, carbonated and sugary drinks will impose immense hardship on ordinary Nigerians who easily keep hunger at bay with a bottle of soft drink and maybe a loaf of bread.
“Our concern is the mass hunger that would result from the slightest increase in the retail price of soft drinks owing to imposition of excise duties as it would be priced beyond the reach of many Nigerians.”
Wabba also noted that Congress was also alerted by the complaint of manufacturers of soft drinks in Nigeria that the re-introduction of excise duties would lead to very sharp decline in sales, forced reduction in production capacity, and a certain roll back in investments with the certainty of job losses and possibly shut down of manufacturing plants.
He said, “Nigerians would recall that this was also the complaint of tyre manufacturing companies such as Dunlop and Michelin which was overlooked by government until the two companies relocated to neighbouring Ghana. A similar situation is playing out with the soft drinks manufacturing sub-sector.
“Government should pay attention. With 38% of the entire manufacturing output in Nigeria and 22.5% share representation of the entire manufacturing sector in Nigeria, the food and beverage industry is the largest industrial sub sector in our country.
“The food and beverage sub-sector has generated to the coffers of government N202 billion as VAT in the past five years, N7.3 billion as Corporate Social Responsibility and has created 1.5 million decent jobs both directly and indirectly.
“There is thus no gainsaying the fact that the industry is a golden goose that must be kept alive.”
He said the health reason proffered by government as reason for the reintroduction of the excise duties seems altruistic.
According to Wabba, Labour is amiss why the government did not place the excise duties on sugar itself as a commodity rather than on carbonated drinks.
He said the truth of the matter is that additional increase in the retail price of carbonated drinks would put more Nigerians at risk of serious health challenges as many people would resort to consuming sub-standard and unhygienic drinks as substitutes for carbonated drinks.
Wabba said, “the appeal to rescind the re-introduction of excise duties on nonalcoholic drinks becomes even more compelling when the projected immediate revenue expected from the policy is weighed against the potential long-term loss to both manufacturers and government. The beverage sub-sector will lose 40% of its current sales revenue.
This translates to a loss of N1.9 trillion. While the government will only make a total projected receipts of N81 billion from the proposed reintroduction of the excise duties. Government also stands to will lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of expected downturn in overall industry performance should the excise duties be effected as being planned.”
He urged the National Assembly to quickly amend the sections of the Finance Act that re-introduced excise duties on non-alcoholic and carbonated drinks. We also ask government to extend COVID-19 palliatives and support incentives
to the Food and Beverages industry to cushion the shock and haemorrhage that the industry is trying to recover from.
