Nigerians who love foreign alcohol and Tobacco are in for a new deal.

Those popping champagne and other alcoholic wines may have to prepare their pockets, because they may be a price adjustment coming soon.

On Sunday, the Ministry of Finance said new excise duty rates have been approved for alcoholic beverages and tobacco.

The new excise duty, which were approved by President Muhammadu Buhari, would take effect from June 4, 2018.

A Statement by the Minister of Finance, Mrs Kemi Adeosun, said President Buhari also granted a grace period of 90 days to all manufacturers before the commencement of the new excise duty regime.

Only those who manufacture these products in Nigeria will not pay this increased excise duty.

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“The new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.

“The new excise duty regimes followed all-inclusive stakeholder engagements by the Tariff Technical Committee (TTC) of the Federal Ministry of Finance with key industry stakeholders.

“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. 

“The TTC recommended the slight adjustment in the excise duty charges after cautious considerations of the Government’s Fiscal Policy Measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy,” the statement posted on the Nigerian government's Twitter handle read. 

According to the government, the effect of the excise duty rates adjustment on trade and investment was also assessed by the Federal Ministry of Trade and Investment and it adopted the recommendations of the TTC. 

Peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages and tobacco. 

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“Following the President’s approval, the new excise duty rate on tobacco was now a combination of the existing ad-valorem base rate and specific rate while the ad-valorem rate was replaced with a specific rate for alcoholic beverages. 

“For Alcoholic Beverages, the current ad-valorem rate will be replaced with specific rates & spread over three years to moderate the impact on prices. This will curb the discretion in the Unit Cost Analysis (UCA) for determining the ad-valorem rate & prevent revenue leakages. 

“For Tobacco, the Government will maintain the current ad-valorem rate of 20 per cent 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 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 government further wrote.

It is not only people who drink wine that will prepare for this new excise duty, as indicated in the statement.

New excise duty rates for alcohol and tobacco in N

The new specific excise duty rate for alcoholic beverages cuts across Beer & Stout, Wines and Spirits for the three years 2018 to 2020.

“Under the new regime, Beer & Stout would attract N0.30k per centiliter (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. 

“Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020. 

The Minister of Finance, Mrs Kemi Adeosun, added that the new excise duty regimes are in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislations on excise duties.

ECOWAS Council of Ministers had at its 62nd and 79th Ordinary Sessions in Abuja in May 2009 and December 2017, respectively, issued directives on the harmonisation of the ECOWAS Member States’ Legislations on Excise Duties. 

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The directives seek to harmonise member-states’ legislations on excise duties of non-oil products and also stipulate the scope of application, rate of taxation, taxable event and amount.

The World Health Organisation has also continued to push for more tax on tobacco and sugary beverages which it believes will cub intake of the substances which it said were dangerous to human health.

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