More Nigerians may lose their jobs and some producers of carbonated drinks will likely close shop as a result of poor sale should the Federal Government implement its planned imposition of tax on soft drinks.
The Nigeria Employers Consultative Association, Lagos Chamber of Commerce and Industry and some economists gave this warning in separate reactions to the FG’s plan as revealed by the Minister of Finance, Budget and National Planning, Zainab Ahmed.
The minister spoke in Washington DC, United States Thursday on the sidelines of the 2019 annual meetings of the International Monetary Fund/ World Bank, adding that the tax as well as additional Value Added Tax on imported goods was meant to increase the government’s revenue generation.
It will kill businesses –NECA
NECA said the planned tax on non-alcoholic beverages by the Federal Government will kill many businesses in that sector.
He said, “In our considered opinion, reintroduction of excise tax on non-alcoholic beverages should not be the case. With the myriad of taxes and levies already being paid by businesses, the reintroduction of excise in a sector with high price elasticity means that government is desirous of killing businesses in the sector completely.
“Once prices are increased, consumers will push back, resulting in sharp decline in demand. With the planned increase in VAT, the introduction of excise will further burden operators in the sector with the following consequences: low demand leading to unsold products; incomes squeeze on businesses that are already struggling with low margin and massive staff layoff, which will affect over 250,000 direct and indirect employees in the sector among others.”
LCCI: It’ll amount to double taxation
The LCCI advised the federal government not to impose tax on carbonated drinks because it would negatively affect both manufacturers and consumers.
He noted that imposition of another tax on the carbonated drinks, with the manufacturers having paid excise duty on such manufactured products, would ultimately affect the demand for the goods.
He added that consumers might resist buying, since the price would have shot up.
He said, “Any imposition of tax on carbonated drinks will definitely affect the demand for such products. Such imposition of tax would be another tax apart from the excise tax already paid by the manufacturers of such products.
“Ultimately, the demand for such products might drop due to the attendant increase in price that might occur. Those who could buy would buy at a higher price.”
Yusuf added that this move would be opposed to the government’s mantra of assisting the real sector, which are the manufacturers.
It’ll hike inflation –Ex-ANAN president
“If this plan of government to tax soft drinks is implemented, then we should be ready for higher rates of inflation. Already, we have high inflation,” he stated.
Nzekwe told one of our correspondents that the Federal Inland Revenue Service had not been adequately reaching out to taxable companies, which was why the government often came out with policies aimed at taxing s