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NLC Rejects 500% Hike In Alcohol, Spirit & Tobacco Tariff

Writes Minister of Finance

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The Nigeria Labour Congress [NLC] has rejected the recent 500 per cent hike in the tariff of alcohol, spirit and tobacco by the President Muhammadu Buhari-led Federal Government of Nigeria.

NLC President, Comrade Ayuba Wabba overruled the Federal Government’s decision in letter addressed to the Honourable Minister of Finance, Mrs. Kemi Adeosun.

The letter was titled “RE: New Excise Duty Imposed by the Federal Government On Alcohol, Spirit and Tobacco Produced in Nigeria: Implication on the Food Beverage Sector and the National Economy.”

Copied to Chief of Staff to the President and Commander-in-Chief, Federal Republic of Nigeria and Director General, Department of State Security [DSS], the letter reads in full:

We recommend that the proposed high tariff should actually only apply to imported spirits tobacco and alcohol to protect our local market and jobs; FG  should consider actions that will encourage/relieve concerned manufacturing companies

I bring you warm greetings from the leadership of the Nigeria Labour Congress. We wish to commend the efforts of your ministry and the Federal Government in steering Nigeria out of the recent economic recession and bringing the national economy back to the path of growth and development.

We write to draw your kind attention to a complaint registered on the above subject matter from one of our strong affiliates, the National Union of Food Beverage and Tobacco Employees (NUFBTE) which is worth giving special consideration.

While NLC commend and support the laudable efforts of government in increasing revenue and diversifying the economy in order to meet its obligations to the people, which is already yielding positive results, we however observe that the Federal Government’s recent policy of 500% increase in tariff on locally produced alcohol, spirits and tobacco will be counter-productive.

This policy will eventually lead to job losses and possible re-location of affected companies to neighboring African countries as was the case with Dunlop and Michelin.

This astronomical increase in tariff will lead to the following effects according to industry key players:

  1. The policy would lead to huge price disparity between locally produced alcohol, tobacco and spirit and the ones produced outside Nigeria or imported.

It will also increase the cost of production and reduce profit margin. It will also lead to the closure and possible relocation of those industries to neighboring countries within the West African sub region.

  1. We also wish to draw the attention of the Honourable Minister to the threat that the current hike in tariff on locally produced alcohol and tobacco poses to Nigeria’s position as the choice investment destination in the food, and tobacco industry in Africa.

Currently, the British American Tobacco Company (BATC) has its largest manufacturing concerns in Nigeria and actually services other markets in the sub-region from Nigeria.

The leadership of our union in the sector, NUFBTE, has been informed by manufacturers in the sector that they are seriously considering moving their businesses elsewhere if government goes ahead with the current hike in tariff.

The BATC which retains its highest manufacturing presence in Nigeria is seriously considering moving out a significant portion of its production lines out of Nigeria to other African countries.

Also, many distiller companies, and Guinness Breweries which invested billions in distilling have decided to divert investments running into billions of naira to other neighboring African countries.

  1. The massive job losses and social backlashes occasioned by the pull out of Michelin and Dunlop manufacturing company from Nigeria to Ghana and other neighboring African countries was a result of unfriendly policies and harsh business environment which we cannot quickly forget.

We must do everything possible to prevent a re-occurrence.

  1. Currently, the Food and Beverages sector employs more than 2 million workers with not less than forty million dependents.

We are concerned that if the government continues with this policy, millions of Nigerian families would lose their source of livelihood.

The multiplier effect of such scale of job losses and despondency is better imagined than experienced;

OUR PRAYERS

  1. The Federal Government of Nigeria should quickly put in motion a procedure to meet and dialogue with key players in the industry to find the best balance;
  2. Government suspend the implementation of the policy, however laudable it is, to prevent the negative impact it will have on the economy, workers and Nigerians until after a proper consultation with key industry players;
  3. We recommend that the proposed high tariff should actually only apply to imported spirits tobacco and alcohol to protect our local market and jobs;
  4. The Federal Government should consider embarking on actions that will encourage and relieve the concerned manufacturing companies with incentives and tax waivers that will rather stimulate the sustainability of the affected companies instead of introducing policies that will further constitute obstacles and distraction to their profitable operation;
  5. The policy of the current government has been to encourage Nigerians to consume what we produce as a country. This should be sustained;
  6. The Federal Government should increase its effort towards advocacy and control of the consumption of alcohol by emphasizing and focusing on aggressive campaign and sensitization of the populace on the health hazards inherent in consuming unregulated local wines and spirits instead of imposing this kind of tariff hike that would lead to factory closures.

While we look forward to your diligent consideration and action on our requests, please accept the assurances of our highest esteem.

Comrade Ayuba Wabba, mni

President

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