The new excise duty for alcoholic beverages and tobacco earlier approved by President Muhammadu Buhari will take effect from Monday, June 4, 2018, says the Federal Government. Consumers will pay more for alcohol and cigarettes.
The News Agency of Nigeria recalls on Sunday that the Minister of Finance, Mrs. Kemi Adeosun, in March announced that the President had granted a grace period of 90 days to manufacturers of the products. Adeosun said the new excise duty rates would spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.
According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco was to raise the government’s fiscal revenues. She said that it would also reduce the health hazards associated with tobacco-related diseases and alcohol abuse.
Adeosun said the new duty rate on tobacco was a combination of the existing ad-valorem base rate and specific rate; while the ad-valorem rate was replaced with a specific rate for alcoholic beverages. She said that under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract one naira specific rate per stick; that is N20 per pack of 20 sticks in 2018.
She said that in 2019, tobacco will attract two naira specific rate per stick or N40 per pack of 20 sticks. The minister said that by 2020, tobacco would begin to attract N2.90 kobo specific rate per stick or N58 per pack of 20 sticks.
Adeosun explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand. The International Monetary Fund, in its 2017 mission, advised Nigeria to raise the excise duty on a stick of cigarette to N5, which is five times the approved amount.
“The low tax level prevails even though Nigeria is the highest alcohol drinking country in Africa and leads the top 10 largest beer drinking countries,” IMF said.