2 Things New Excise Duty On Cigarette Will Do
The price of foreign cigarettes in Nigeria may go up soon.
The price hike is expected in few months and this is because the federal government has increased excise duty on imported tobacco.
In the wake of this hike, policy, Dr Boniface Chizea analyst who spoke to Bounce News has commended the government for this decision.
Dr. Chizea believes the decision to raise excise duty will be beneficial to Nigeria in two areas.
1. Revenue Generation.
As specified by the government in the statement issued by the Ministry of Finance, the upward review of the excise duty rates for tobacco will help achieve a dual benefit of raising the Government’s fiscal revenues.
“Under the newly approved excise duty rates for tobacco in addition to the 20 per cent 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.
"Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia," the finance ministry further wrote.
A survey by the National Bureau of Statistics and some international organisations in 2013 showed that 4.5 million adult Nigerians are tobacco addicts. That figure, however, may have increased or reduced.
The survey also showed that while the eastern part of the country had high cases of smokeless tobacco usage, the north had high cases of tobacco smokers.
With the Statistics, Dr. Chizea believes that the government could raise revenue from the excise duty and plug it into recurrent expenditure to ease the burden on revenue generated from crude oil sale.
2. Health Implication
“Tobacco has no health value and even as something that is used at social gathering, it still adds no value.
“The new excise duty could discourage people who smoke from smoking because it has implications for health and cost of health maintenance.
“If people have problems with their health as a result of smoking, it is add-on cost for us on fiscal income. Instead of using the money for other things, it would be used to treat people who have come down with ailments.
“The policy is also good, as it discourages people who have such habits,” Dr. Chizea said.
It was the second reason that the government gave for the new excise duty and the policy analyst is fully in support of the decision.
He also expressed the belief that local manufacturers of tobacco also pay some revenue to the government to ensure that the usage of local tobacco would also be minimised.
However, Dr. Chizea warned that care should be taken to ensure that such tariffs do not lead to loss of jobs.
“I know that there is tariff on locally manufactured tobacco already, but like it or not, if you take the Nigerian Tobacco Company, they employ a lot of people in Nigeria and you have to manage it so that it does not lead to job loss.
“Tobacco smoking is a habit that we can use fiscal policy to discourage,” Dr. Chizea also emphasised.