Business
Minister proposes increased tariff on cigarette, alcohol
Kemi Adeosun, Minister of Finance, is proposing increased tariff for cigarette and alcohol.
Her proposal is in line with the implementation of the ECOWAS common external tariff (CET), one of the instruments of harmonising member states to strengthen its common market agreed upon on October 25, 2014.
In a memo sent to President Muhammadu Buhari, Adeosun suggested that a two-part tariff be approved for tobacco products.
A two-part imposes two types of import levies on the same item.
Adeosun suggested a 20 percent “ad valorem” tariff and a specific tariff of N1 per stick be placed on be placed on cigarettes and tobacco products.
She also suggested that a specific tariff of 35 kobo per CL be placed on beer and stout, N1.50k per CL on wines, and N2 on spirits and other alcoholic beverages.
Ad valorem tariff is levied as a fixed percentage of the value of a commodity.
According to the minister, this was a recommendation made by the tariff technical committee (TTC), which is chaired by the ministry of finance with members from ministries of industry, agriculture, Central Bank of Nigeria, Federal Inland Revenue Service, Office of the Secretary to the Government and Manufacturers Association of Nigeria.
“Further to the request, the chief of staff to Mr President requested for my views on the matter. As a result of this, the TTC deliberated on the subject and recommended for an upward review of excise rate on tobacco and alcohol, taking into consideration their health implications and revenue potentials,” she wrote.
“In addition, it also recommended the introduction of a specific frate of excise on alcohol including beers and a mixture of ad valorem and specific rate excise structure on tobacco products in ECOWAS member states.
“In line with the recommendations of the TTC, I wrote and requested Your Excellency’s consideration and approval for the proposed revised rates of excise on alcohol and tobacco, vide letters: FMF/OHMF/TA/1/2017, dated 3oth October, 2017 and FMF/PHMF/ALCOHOL/1/2017, dated 8th November, 2017.”
In 2017, the World Health Organisation called for increased taxes on tobacco products to discourage its use.
Nigerians smoke about 20 billion sticks of cigarette years, according to Isaac Adewole, minister of health. Nigeria is also said to be the highest alcohol-drinking country in the world.