Come June 4, 2018, there will be increment in the prices of cigarettes and alcoholic beverages.
Following the approval of an amendment to the excise duty rates by President Muhammadu Buhari, alcoholic beverages and tobacco consumption will be revolutionalised with effect from the said date.
In a statement in Abuja on Sunday, Kemi Adeosun, the Minister of Finance, confirmed that the Buhari-led administration is committed to reducing the consumption of tobacco and alcohols. Having said this, the new excise duty rates, according to the minister, is expected to last for a period of three-year from 2018 to 2020 in order to moderate the impact on prices of the products.
The minister said the new excise duty regimes followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders.
According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco was to achieve a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.
Adeosun said the new regime for tobacco products will be a combination of the existing ad-valorem base rate and specific rate.
“For alcoholic beverages, the current ad-valorem rate will be replaced with specific rates and spread over three years to moderate the impact on prices,” she said.
“This will curb the discretion in the unit cost analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages.
“For tobacco, the government will maintain the current ad-valorem rate of 20 percent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices.
“Under the newly approved excise duty rates for tobacco in addition to the 20 percent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of 20 sticks) in 2018; N2 specific rate per stick (N40 per pack of 20 sticks) in 2019; and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.”
According to the statement, Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 percent of the price of the most sold brand, as against 38.14 percent in Algeria, 36.52 percent in South Africa and 30 percent in Gambia.
The new duty regime is in line with a directive from the Economic Community of West African States, ECOWAS on the harmonisation of member-states’ legislation on excise duties.