Nigeria can earn N600bn from tobacco, alcohol tax hike – World Bank
Written by freshadmin3 on June 25, 2021
The World Bank has said Nigeria can generate N600bn annually by increasing the excise duties on tobacco and alcohol as recommended in the National Development Update report.
A Senior Tax Specialist of the bank, Rajul Awasthi, said this on Thursday at a virtual discussion on domestic revenue mobilisation.
According to him, Nigeria has one of the lowest excise duty rates on tobacco and alcohol in Africa, and the duty rate on cigarettes is lower than the standard set by the Economic Community of West African States.
He advised the Federal Government to either adopt the excise standards for tobacco and alcohol recommended by the ECOWAS or Kenya to boost the country’s revenue from tax.
He said this kind of tax increase would not impact the majority of the population or low income-earners but improve the ease of tax compliance monitoring.
The tax specialist said, “On excise, what we see is that Nigeria has one of the lowest excise rates on alcohol and cigarettes; on cigarettes, they are even lower on the ECOWAS target.
“So, if Nigeria were to adopt the same rate of excise duty that Kenya has adopted, they can raise a significant amount of revenue. Similarly, if they are to adopt ECOWAS, a standard, that will also raise the revue significantly. What is more important is that these two sources will not impinge on consumption growth; in fact, these harm goods. So, taxing them is actually good from the health perspective.
“Excises on tobacco and alcohol do not impact the vast majority of people and compliance can be monitored much more easily by the compliance agencies. If the measures outlined in our report are implemented, these excise duties on tobacco and alcohol can raise more than N600bn a year.”