The Federal Government is planning to increase excise tax on tobacco, cigarettes and alcoholic beverages. Minister of Finance, Kemi Adeosun, disclosed this on Friday at the meeting of ECOWAS Financial Council of Ministers in Abuja.
She said the Nigerian government identified with the ECOWAS position on excise tax on some products. The regional organisation announced the decision at the Friday meeting.
An excise duty is a type of tax charged on goods produced within the country, as opposed to customs duties, charged on goods from outside the country.
Vice President of ECOWAS Commission, Edward Singhatey, said member states had begun work on draft directive to harmonise excise duties on tobacco products.
Mr. Singhatey added that the draft would include legislative and regulatory provisions of member states in tracking and tracing mechanisms related to tobacco products.
He said “this is to facilitate smooth running of the domestic market of tobacco products and ensure compliance with obligations of member states under the World Health Organisation Framework Convention on Tobacco Control and the Protocol to Eliminate Illicit Trade in tobacco products.”
The commission’s vice president pointed out that member states had a duty to establish efficient tax collection measures and explore sources of tax revenue.
He, therefore, said that the meeting would consider the draft document to establish an ECOWAS Customs Code aimed at harmonising customs legislations in the sub-region, in line with international requirements.
He noted that “it is important that customs procedures are modernised and simplified so that they do not become obstacles to legitimate trade and oppressive to the very society in which they operate.
“Experts in customs procedures agree that it is possible to maximise revenue collection and at the same time facilitate legitimate trade and protect the society.”
Singhatey said it was pertinent for member states to work on harmonisation of Value Added Tax (VAT) exemptions “to ensure equal treatment of all economic operators in the community.”
Mrs. Adeosun, who was represented by the ministry’s Permanent Secretary, Mahmoud Dutse, said the federal government had also started reviewing its excise tax rates and structure tobacco, cigarettes and alcoholic beverages.
She added that the review was in line with ECOWAS draft regulation on harmonisation of excise taxes on tobacco.
She explained that “one of the techniques used by governments all over the world is to tax products that are either consumed particularly when you want to do progressive taxation, or products that are hazardous to health and increase health spending.
“It is a twin objective; to raise revenue and decrease tobacco consumption.
“In this regard, the use of modern techniques and tools of production controls such as tax stamps or special package markings in the context of the track-and-trace system, which is a global best practice, are being considered.
“The harmonisation of laws establishing a system for tracing, tracking and tax verification of manufactured or imported tobacco products in ECOWAS member states is a welcome development for Nigeria.”
Mrs. Adeosun said it was important for member states to put in place effective track-and-trace systems to eliminate illicit trade.
She noted that “without effective track-and-trace system, illicit trade will undermine trade and tax measures and will have serious adverse effects on public health in West Africa.
“Nigeria supports the ECOWAS directives of VAT exemptions on basic food items in their raw states, medicaments and pharmaceutical products.”
She expressed government’s support for ECOWAS Customs Codes, adding that it was part of efforts to enhance the implementation of common tariff and promote common market for West Africa.