Leading tax, fiscal policy and economic experts have praised the federal government for its recent direction to suspend proposed increases in excise rates on tobacco, alcoholic and non-alcoholic beverages as part of fiscal policy measures and 2023 tariff amendments.
Mr. Taiwo Oyedele, Lead Fiscal and Fiscal Policy Expert and Head of Fiscal and Fiscal Policy at PricewaterhouseCoopers (PwC) Nigeria, praised the federal government for engaging and listening to legitimate concerns raised by industry players and suspending the proposed increases. in excise taxes. interest rates, which has generated a lot of interest among key stakeholders and organized private sector groups.
“I am glad to know that the government is no longer going ahead with the proposed increases, it is great that the government, through the Federal Treasury Secretariat and the Fiscal Policy Reform Committee (FPRC), is giving in to the clamor of experts and industry players. . I recommend a more collaborative and evidence-based approach for future changes,” she said.
Oyedele, noted that since the government had approved in early 2022 excise rates for 2022 to 2024, with various increases of up to 95% in some cases, further increasing rates outside of the established roadmap would have no adverse effects. only in the manufacturing sector. but negatively impact the economy.
Speaking on the same topic during an interview on Arise Xchange, a business show on Arise TV, Oyedele stated that FG could not afford to implement an excise rate increase, as doing so would not only worsen the current ailing condition of the manufacturing sector, but would inflict more economic hardship on the people.
One development economist, Kunle Oshobi, advised the federal government against proposed increases in excise rates for 2023-2024, as the move could amount to policy inconsistency capable of generating mistrust in the economy, investor caution and alter planned private investment. He specifically cited the fragile outlook for the Nigerian beer sector despite long-standing investments in the value chain as a matter of great concern.
Oshobi said it was wrong for the government to add additional pain to a beleaguered sector struggling to recover. According to him, the proposal, if implemented on assumptions without recourse to data, could precipitate further challenges in an already volatile business environment.
Another economist and policy analyst, Mr. Osas Akinbo, of the same line of thought, said that increasing excise duties on beverages in this prevailing economic situation would undoubtedly put a lot of pressure on consumers and beverage manufacturers. According to him, industry data has shown that the demand for beverages is not inelastic.
Akinbo stated that a further increase in excise duties would likely have a net negative effect on sustainable government revenues, national GDP and Nigeria’s corporate image, leading to the erosion of investor confidence in a market already affected by The volatility.
He recommended that instead of imposing taxes that would further put pressure on companies, the government should encourage backward integration efforts through agri-food investments already undertaken by the beverage industry, especially the beer sector, and reinforce initiatives for local supply that promotes import substitution.
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