Tax On “Soft Drink”: NLC Kicks, Seeks Amendment of Law

By Uche Mbah

The Nigeria Labour Congress (NLC), has reacted to the Federal Government’s decision to introduce N10/litre tax on all non-alcoholic, carbonated and sweetened drinks.

Recall that Zainab Ahmed, Minister of Finance, Budget and National Planning, a couple of days ago,  said that these drinks, popular among, particularly, the masses of  Nigerians, will be taxed. This, according to her, is geared towards revenue drive for health related expenses.

But in a statement, Ayuba Wabba, President of NLC, said if that was the case, Government ought to have taxed sugar itself instead of its derivative. He, therefore, dismissed the reason as altruistic.

“Our concern is the mass hunger that would result from the slightest increase in the retail price of soft drinks owing to the imposition of excise duties as it would be priced beyond the reach of many Nigerians,” Wabba said.

“Congress was also alerted by the complaint of manufacturers of soft drinks in Nigeria that the re-introduction of excise duties would lead to a 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.”

Other groups, like Manufacturers Association of Nigeria, MAN, Lagos Chamber of Commerce and Industries, LCCI, hinged their objections on potential loss of jobs.

Nwaba referred to the exit of Tyre companies from Nigeria, saying this was caused by similar tactless policies.

“Nigerians would recall that this was also the complaint of tyre manufacturing companies such as Dunlop and Michelin which was overlooked by the 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 highlighted  health risks such tax will create would put many Nigerians at health risk.

“The appeal to rescind the re-introduction of excise duties on non-alcoholic 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,” he added.

“This translates to a loss of N1.9 trillion. While the government will only make total projected receipts of N81 billion from the proposed re-introduction of the excise duties. The government also stands to lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of the expected downturn in overall industry performance should the excise duties be effected as being planned”.

He appealed to the national assembly to amend the sections of the Finance Act that re-introduced the tax.