The Nigeria Labour Congress (NLC) on Friday described the hike in tariff on locally produced alcohol, spirits and tobacco as potentially “counter-productive.”
Consequently, it demands immediate suspension of the policy till due consultation with the relevant interest groups have been concluded.
Also, the NLC wants government to limit the new tariffs to only imported brands, to protect what it said are over two million jobs that are potentially under threat if the policy goes ahead.
On June 4, 2018, Minister of Finance, Kemi Adeosun, announced the take-off of the new excise duty for alcoholic beverages and tobacco, earlier approved by President Muhammadu Buhari.
The minister said the upward review of the excise duty rates for alcoholic beverages and tobacco was to raise the government’s fiscal revenues.
The new rates would be spread over a three-year period from 2018 to 2020, to moderate the impact on prices of the products.
Under the new rates for tobacco, in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract one naira specific rate per stick; that is, N20 per pack of 20 sticks in 2018.
In 2019, tobacco would attract two naira specific rate per stick, or N40 per pack of 20 sticks.
By 2020, tobacco would begin to attract N2.90 kobo specific rate per stick, or N58 per pack of 20 sticks.
For beer and stout, the new rate would attract 0.30k per centilitre (Cl) in 2018 and 0.35k per Cl each in 2019 and 2020.
On the other hand, wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for spirits in 2018, N1.75k per Cl in 2019 and N2 per Cl in 2020.
But, the NLC in a statement on the implications of the new rates on food beverages sector and the national economy, criticised the policy, noting it would eventually lead to job losses.
Although the NLC noted the positive impact of policies to increase government revenue and diversify the economy, it said the increase in tariff on locally produced alcohol, spirits and tobacco would be counter-productive.
“This policy will eventually lead to job losses and possible re-location of affected companies to neighbouring African countries as was the case with Dunlop and Michelin,” the NLC said, in a statement sent to newsmen.
The statement, signed by the NLC president, Ayuba Wabba, stated the policy would bring a huge price disparity between locally produced alcohol, tobacco and spirit and the ones produced outside Nigeria or imported.
Besides, Mr Ayuba said the policy would also increase the cost of production and reduce profit margin of the operating companies, leading ultimately to the closure of the companies.
He said the leadership of the National Union of Food Beverage and Tobacco Employees (NUFBTE) has already informed the NLC about some manufacturers in the sector seriously considering moving their businesses elsewhere if government goes ahead with the new hike in tariff.
“The BATC which retains its highest manufacturing presence in Nigeria is seriously considering moving out a significant portion of its production lines out of Nigeria to other African countries.
“Also, many distiller companies, and Guinness Breweries, which invested billions in distilling have decided to divert investments running into billions of naira to other neighboring African countries.
With over two million workers in the the food and beverages sector, excluding over 40 million dependents, Mr Ayuba said Labour was concerned about the government continuing with the policy, as millions of Nigerian families could lose their source of livelihood.
Consequently, he said he wants government to quickly put in motion a procedure to meet and dialogue with key players in the industry to find the best balance for the policy.
It urged the government to suspend the implementation of the policy, to prevent the negative impact i could have on the economy, workers and Nigerians until after a proper consultation with key industry players.
The NLC said the proposed high tariff should apply only to imported spirits tobacco and alcohol to protect the local market and jobs.