The proposed finance bill of 2023 fiscal year goal should be to promote Nigerians’ health and strengthen the manufacturing industry, not to raise more money for the government.
Stakeholders in the industry increasingly argued against the suggested rise in taxes on manufactured goods and services, and this was their point of view.
The World Bank Group endorsed the proposed law in its remarks yesterday at the Finance Bill 2022 stakeholders’ conference, pointing out the necessity of recognizing engendering pro-health tax.
The exercise’s modern purpose is to internalize the negative externalities of “harm goods.” It emphasized that higher excise taxes, which drive up the cost of goods harmful to human health, are the cause of this.
Dr. Sani Aliyu, a hospital doctor and former coordinator of the Presidential task team on COVID-19, noted that the anticipated implementation of a tax on sugar and sweetened beverages in Nigeria is a positive move.
He said, ” “This is the right thing to do for three basic reasons. The first reason is that globally, we are faced with an epidemic of non-communicable diseases such as diabetes, hypertension, strokes and obesity. All of these are predisposed to cancers.”
More than 10 million Nigerians, or 6% of the population, have Type 2 diabetes, according to Aliyu. He made a suggestion that the two leading causes of impairments among Nigerians are diabetes and strokes.
He clarified: “We also know that seven out of 10 of us will end up dying from one of these two conditions. Unfortunately, diet plays a major role as a driver of non-communicable diseases. 14 per cent of non-communicable diseases arise directly as a result of our dietary preferences. This law will help reduce consumption and boost the health status of Nigerians.”
The players in the business stressed that the ideal course of action is for the government to boost production in order to achieve maximum tax revenues across the board, arguing that overtaxation will further reduce production.
Alfred Olajide, Managing Director/Chief Executive Officer of Coca-Cola Nigeria, advised care in the application of the law on his own behalf.
He claimed that as the government looks into new taxation options to increase money, it must keep in mind the food and beverage industry’s existence and steer clear of legislation that could harm the manufacturing industry as a whole.
His words: “It is clear that the government needs revenue but a balance must be achieved so that the industry does not face challenges as from next year. This is within the context of the importance of food and beverages to the economy.”
“From the Gross Domestic Product (GDP) perspective, the sector represents about five per cent of Nigeria’s GDP. It has received about N200 billion in Value Added Tax and another N200 billion in company income tax in the last five years. More importantly, it employs about 1.5 million people in the food chain and more than 15 million people within the downstream impacts and upstream impacts of employment it generates.”
He claimed that companies that make sugar, drinks, cement, and textiles, to name a few, all have tales to tell about the sector’s current problems.
‘’The fundamental assumption is that if there are increases, the impact of trade volume tends to lower investment, direct job losses and economic activities will be downplayed, if the companies collapse, the children of the workers will suffer.
‘’We have seen the decrease in market demand, excise duties have led to distortions here and there, although we are grateful for this engagement but we will insist that for whatever reason, increase in taxes will amount to collapse of our industries.”
Olajide requested the government to evaluate the advantages of the excise levy of N10 (about US$0.02) per liter on all non-alcoholic and sweetened beverages and to present evidence to back up the assertions.
Sadiq Usman, executive director of Flourmills Plc, also spoke during the discussion and said that the move appears to run counter to the government’s updated 10-year national sugar master plan, which supports self-sufficiency in sugar production.
He claims that under the 10-year investment plan, businesses must invest revenue from current sugar companies in backward integration.
The importance of these enterprises in achieving the crucial backward integration and self-sufficiency in these items may be diminished, he expressed concern.
“We must reflect on what message we are trying to send across. There is a need for consistency in government policies to help companies make good investment decisions. These policies need to consider the impact on health, as well as contributions to GDP and job creation.”
Professor Pat Utomi agreed with Alfred Olajide when he said that any additional tax increases would force businesses to pass the cost on to customers.
In a cost-increasing environment, Utomi, a founding member of the Lagos Firm School, said that the weight will fall on the business itself.
He observed: ‘’The mistake we keep making in my view is that, there is a lot of conversation that says the problem of Nigeria is not a problem of revenue but a problem of poor payment of taxes, the Ministry of Finance keeps making the point that the problem is that the country is not collecting enough taxes, this is to me, a fundamental mistake’’
‘’First and foremost, Nigeria is under-producing, the few that are produced are being over-taxed. What we need is to stimulate production, when we do that then many people will be engaged and as a result pay taxes but that over taxation will affect our industries negatively and bring more poverty to the citizens’’.
He said taxation is not the necessary answer to the nation’s economic challenges, ‘’We need to boost supply that is the core challenge facing the economy”
