The Manufacturers Association of Nigeria, MAN, has decried the increase in the exercise duty for 2023, adding that the real impact on our members in the industries under excise regime from the 2022 fiscal policy has been negative and this has created.
Reacting on the Newly Released 2023 Fiscal Policy Measures And Tariff Amendments, through the Director General of MAN, Segun Ajayi-Kadir, the association listed the negative impact to include reducing production volumes with its attendant result on downward trend in capacity utilization, increasing illicit trade in some of the affected products; erosion of members’ market share and revenue, especially following continued devaluation of the Naira against major currencies and inflation and increased security challenges faced around the country;
Others are freezing employment and redundancies in the manufacturing industry and squeezing margins as our members are unable to pass additional costs to consumers by way of higher prices given their eroded income and dwindling purchasing power.
“Apart from the above challenges faced in the business environment, manufacturers also have to contend with currency devaluation and increasing inflation resulting in higher cost of production as our members have little to no access to foreign exchange at the official window and have to resort to the parallel market at an extra cost of around N300 to US$1.00”, he said.
“All these are without regard to the industry’s contribution to the Nigerian economy in the way of significant taxes being paid (Excise, Corporate Income Tax, Value Added Tax – VAT, etc.); export revenue in foreign currency; employment of thousands of Nigerians by the industry directly and indirectly including supply chain partners in the SME sector as well as Corporate Social Responsibility, CSR, to the local communities and other stakeholders nationwide”, he added.
On Other Issues, he said, “We commend the Federal Government on some of the approvals as provided for under the Supplementary Protection Measures (SPM) on Annex I, II and III of the 2023 Fiscal Policy guidelines, which is in support of MAN agenda of Resource-based Industrialization. We however request that in addition to the issue of Excise tax increase, the following items should be reconsidered”.
Speaking on Green Surcharge – Import Adjustment Tax (IAT) on Motor Vehicle (Chapter 87), it said, “While we support and respect government’s opinion and measures aimed at addressing climate change and Nigeria’s commitment to net zero emission, it would have been better if we exercise some level of strategic caution and allow for a period of realistic transition to clean energy. This is considering the fact that most of our members engage logistics companies, majority of whom are in the Small and Medium-scale Enterprise (SMEs) cadre, who would need some time to migrate to green fuel and who lack the financial capacity to purchase electric vehicles. Anything short of this will increase the input cost of products culminating in un-competitiveness as well as eliminating many SMEs in the logistics downstream of the manufacturing sector.
On Single Use Plastic Surcharge of 10% , the association said, “the surcharge of 10% on Single Use Plastic under HS Code 3919.10.00.00 and 3919.90.00.00 as well as Headings – 39.20; 39.21 and 39.23 (Plastic Containers, Films and Bags), appears ill-timed and hasty in view of the fact that Government, through the Federal Ministry of Environment, is currently working towards instituting a Plastic Cycle Waste Management Policy with technical assistance from the United Nations Industrial Organisation, UNIDO, along with support from the Japanese government”.
“The project according to the association is to institute a long-term solution to manage the menace of plastic wastes and assist the affected industries to retrofit, thereby reaching the threshold of the United Nations goal of green environment as being espoused by the series of the UN organized Conference of Parties, COP.
“It is therefore necessary that this process should be allowed to reach its conclusive end before other measures such as provisioned in the 2023 Fiscal policy guidelines are pronounced by Government”, maintained the association.
Our Appeal: “We have earlier noted and forwarded our position on the Excise duty tax to the Government while it was being proposed in the 2023 Fiscal Policy Guidelines. We are again emphasising the fact that the proposed increase in the recently released 2023 guidelines i.e., on Beer, Wines and Spirits, Tobacco, has the potential to trigger unprecedented distortions in the affected industries as well as the entire manufacturing sector”.
“The policy is capable of producing negative effect on investments with a huge consequence on job retention in these industries. We therefore strongly recommend that Government should maintain the status quo regarding the already government-approved excise duty increases on these items in the 3-year Roadmap as contained in the 2022 Fiscal Policy Measures. This was approved by Mr. President and implementation commenced on 1st June 2022. The industry CANNOT afford any further increases at these extremely challenging times”, the Association stressed.