MAN Raises Alarm over Heavy Taxes on Carbonated Soft Drinks

The Carbonated Soft Drinks sub-sector of the Manufacturers Association of Nigeria (MAN) has raised serious concern over the Federal Government’s proposed 20 per cent Ad-valorem Excise Tax on Non-Alcoholic Beverages which covers the widely consumed Carbonated Soft Drinks (CSD) segment.

The sectoral group heads raised the alarm after rising from a meeting held on Thursday 17th November 2022 in Lagos, stressing that such a move would spell doom for the sector since the effect of the prevailing N10 per litre tax regime is already crippling the sector with its huge impacts on their businesses.

Industry study has shown that the impacts of the prevailing N10 per litre excise tax effect between June and August 2022 indicated an eight per cent revenue decline as a direct result of excise tax implementation, while it is anticipated that the decline will hit 25 per cent by December 2022 if not reviewed.

However, this excludes the cost of write-offs of products produced, excised but not sold.

It is also anticipated that with the proposed 20 per cent Ad-valorem tax introduction, the collapse of the soft drink market is imminent as  thousands of jobs will be affected while the eventual aim of the government in collecting revenue will be totally defeated.

The sectoral group noted  “Most certainly the additional 20 per cent will not only kill the sector but result in the loss of revenue by the Federal Government, and a consequential phenomenal loss of jobs by various layers of the Nigerian workforce.’’

This development was scrutinized on Thursday, November 17th, 2022 by the Soft Drinks Manufacturers Sub-sector of the Manufacturers Association of Nigeria (MAN) which accounts for 33 per cent of the entire manufacturing sector in Nigeria, while the manufacturing industry contributes 15 per cent to the country’s Gross Domestic Product (GDP).

The food and beverage sector also contributes 5 per cent, and with a payment of N202 billion to the government on Value Added Tax (VAT), and N207 billion in Company Income Tax (CIT).

The Federal Government, therefore, is bound to lose these huge amounts if the sector is allowed to collapse.

The Nigeria Bureau of Statistics (NBS), in its report has declared that the food and beverage division of the economy in the last five years generated 1.5 million jobs, both direct and indirect.

It was gathered that from 2020 to date, some companies in the sector have been struggling to pay minimum tax, which is indicative that the business climate is deteriorating, because the companies are finding it difficult to carry out their operations efficiently.

The MAN sectoral heads at the meeting lamented the overwhelming effects of the N10 per litre tax, which has become burdensome with the high cost of operation in the country and its component elements.

According to them, this is already having devastating effects on the end cost to consumers, considering their poor economic condition, stressing that an additional 20 per cent tax will definitely kill the sector.