NIGERIA – Experts in the field of economics and some industrialists have faulted the proposed 20 per cent tax on carbonated and non-alcoholic beverages, saying it would seriously affect Micro, Small and Medium Enterprises, (MSME) businesses.
The Former Chairman, Nigerian Association of Small-Scale Industrialists, (NASSI), Mr. Segun Kuti-George, in an interview with newsmen noted that MSMEs were already facing lots of challenges, and the country cannot continue to look for money with the wrong policies to the detriment of small businesses.
He noted that while large companies such as Coca-Cola could bear the burden of additional tax and sometimes pass the burden to consumers, smaller operators in the beverage industry could not.
Dr Muda Yusuf, Founder, Centre for the Promotion of Private Enterprises, (CPPE), stated that the 20 per cent tax proposal would hurt the food and beverage sector, hinder manufacturing performance and add more to the country’s inflationary pressures.
According to him, players in the food and beverage sector and manufacturing generally are burdened by high production and operational costs, multiple taxations among others, as a result, it was unfair to contemplate an additional tax on the already struggling sector.
He added that the proposal was not without implications on job creation and retainment.
“In essence, this tax proposal is a negation of the quest for job creation and poverty reduction.
“Besides, the food, beverage and tobacco sectors have excellent records of backward integration with inherent multiplier effects on jobs and incomes.
“CPPE strongly advises against the contemplation of an additional tax on this critical sector of our economy,” he said.
Also, an economic analyst, Mr Teslim Shitta-Bay, said while the government projected N81 billion should the additional excise be successful, the N10 per litre tax on carbonated non-alcoholic drinks had already led to a 16 per cent fall in industry revenue.
Given that, he affirmed that the ugly scenario which would be created would affect the overall economic productivity the government was trying to protect.
He faulted the attempt to use the sugar angle to rationalize an economic virus that may become a pandemic to be unleashed on the non-alcoholic beverage industry.
He noted that 70 per cent of citizens’ medical bills in the country were private expenses, adding that the call for government to raise taxes to cover these private expenses was perplexing and inconsistent with best global tax practices.
According to Shitta-Bay, there is no justification to use health to rationalize simply because the carbonated soft drinks sector had not violated the sugar consumption regulations.