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Beer, other alcoholics yet to see any increase in retail prices 1 week after tax hike
More than one week after the effective implementation of a new excise duty regime on alcoholic beverages and tobacco products, market price sampling weekend showed that prices of related products remained intact.
It would be recalled that the new tax regime took effect from Monday, June 1, 2018 as earlier scheduled by the Minister of Finance, Mrs. Kemi Adeosun
However, findings by our correspondents weekend showed that several companies are currently meeting and working on a new pricing structure that will apart from making them remain in business, new prices regimes in the market may come in divergent dimensions including reduction on content volume while keeping price unchanged or increasing content to arrive at a higher and nearly commensurate new prices.
In an interview, the Chief Executive Officer of a wine manufacturing firm in Lagos, PEL Extract Limited, Mr. Kotey Linus, estimates that there will be over 15 per cent increase in the price of wines.
He argued that whereas a crate of wine from his firm is currently N3,000, with the new tariff, it will now sell for N3,500.
Just like PEL group, body language from other manufacturing firms including Sona Group of Companies, Distillers and Blenders Association of Nigeria (DBAN) are coming up with a number of price review mechanism that will not weaken customers’ patronization in the long run so as to remain in business.
It would be recalled that prior to the takeoff of the new tax regime, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, had made a case against introducing the tax, saying “it was not the best time to even consider imposing excise duty on the goods manufactured under this current economy where producers power their production lines”.
According to him, “If the government is trying to grow the local industry, imposing duties on locally manufactured goods is a contradiction of that objective. That is what we are saying about this drive to earn revenue. If the revenue drive is becoming too aggressive, it will negatively affect investment and the capacity of businesses to create jobs.
“The imposition of duties on these consumer goods will push up the cost of production and the prices of the items will be increased.
“These firms are already paying Corporate Tax, Withholding Tax, Education Tax and so many other taxes. Imposing excise duty on their products again will not be a good idea.”
Besides, Manufacturers Association of Nigeria (MAN), had argued that contrary to the claims by the Minister of Finance, Mrs. Kemi Adeosun that the excise duty was decided after due consultations with stakeholders, MAN which is a stakeholder in the Presidential Tariff Technical Committee, made it clear that it rejected the tariff increase at the last meeting it held with Adeosun.
This means that the new tax regime was introduced without recourse to the yearnings of the apex manufacturing group in Nigeria after all.