The Manufacturers Association of Nigeria (MAN), has warned that the Federal Government’s proposed 20% Ad-Valorem Excise Tax on non-alcoholic Beverages is likely to result in a 0. 43 percent output contraction and a 40% decline in overall industry revenues over the course of the next five years.
The stakeholders believe that the carbonated soft drink sub-sector is in its final decade. And may become extinct far sooner than anyone could have predicted. They characterized the levy as a foolish choice that will not only put the fizzy beverage sector and the entire economy in a pickle but also obliterate the planned rise in taxation.
In other words, the government will see a short-term rise in revenue, but losses in subsequent years and the eventual closure of factories will result in zero tax for the government in the future.
In the end, the World Bank’s economic advice on tax regimes to raise revenues by governments in developing countries including Nigeria would spell doom for manufacturers and that should be discarded.