The Distillers and Blenders Association of Nigeria (DIBAN) today rejected the Federal Government’s new increase in excise duty on locally brewed wines and spirits, describing the fiscal measure as unjustifiable.
The association’s Chairman, Chief Patrick Anegbe, expressed the position of his members on the excise duty while briefing journalists in Lagos, describing the hike as a threat to the N420 billion investment in the industry.
While claiming that there was no prior engagement/consultation whatsoever with the indigenous producers of wines and spirits before adopting the new excise method, Anegbe said that the association was particularly worried that if implemented, the hike could lead to over 300,000 job losses nationwide.
He said: ”We Distillers and Blenders Association of Nigeria (DIBAN), under the auspices of the Manufacturers Association of Nigeria (MAN) reject the new astronomical hike in excise duty being selectively imposed on the domestic wines and spirits, one of the oldest and driving indigenous industry in Nigeria.
”For the record, the new duty approved for implementation by the Honourable Minister of Finance, translates to an increase in duty from the current average of N30 per litre to N150 in the first year and N200 per litre subsequently.
”This translates to an increase from current average duty of N270 to N1,350 per case (carton) in the first year and N270 to N1,800 per case from second year. This is an increase of over 500 per cent purely on local wines and spirits with the exclusion of all imported wines, spirits and champagne.
”We reject in totality, the highly punitive and selective astronomical hikes in duty, a purely IMF agenda being camouflaged as a health concern!”, Anegbe added.
According to him, the hike in excise duty is an attempt by the minister to foist an IMF-sponsored agenda on Nigeria and by so doing, further compound the hardship of already impoverished Nigerians.
In addition to job losses, the industrialist projected that if the latest excise duty is implemented, it would lead to the collapse of the indigenous wines and spirits segment and pave way for the complete takeover of the market by the imported and smuggled brands.
He clarified further: “We are also disturbed that the new hike will not only affect the wines and spirits industry, but also other key sectors of the economy and businesses such as packaging industries, bottles, cartons, labels, cork, laminates, glue, ink, printing, laboratory, marketing, consulting, media, among others.
”We strongly hold the view that if the intention of government is to grow local industries, imposing exorbitant duties on locally manufactured goods is a contradiction of that objective.
”For the sake of emphasis, from a recent study carried out by KPMG, it was concluded that price elasticity holiday spirits/wines segment is very high such that a 10 per cent increase in price of wine will lead to about 20.9 per cent fall in demand.
”A 19 per cent increase in the price of spirit will result in a 41 per cent decline in volume and this is predominant in the low price segments which represent 78.65 per cent of the total volume.
”With over 500 per cent increase approved by the government, the damage these will cause to locally produced wines and spirits business can only be imagined”, the association’s leader added.
Anegbe recalled that the association had been supportive of the governments through the payment of relevant duties, taxes, excise, among others, by its members.
This is even as he claimed that prior to the announcement of the new excise duty new rates, the association had made unsuccessful attempts at getting the minister’s attention before migration from the current Ad Valorem to the specific scheme.
He pointed out that members of the association were not opposed to current government’s effort to boost non-oil revenue, adding however that for governments to achieve the desirable objective, there is need for continued existence of the indigenous low-priced wines and spirits in the market.
The DIBAN leader explained:”We are therefore using this medium to call on the federal government to halt the implementation of the new duty hikes. Government should hold genuine consultation with all stakeholders in the domestic wines and spirits space.
”There is need to save the jobs of thousands of Nigerians, as well as ensure the continued survival of one of the oldest indigenous industry, the wine and spirits sector”, the industrialist canvassed.
