The prices of alcohol and cigarette would hit the roofs soon as President Muhammadu Buhari approved increase in excise duty rates on the products with effect from June 4, 2018.
He also granted a grace period of 90 days to all manufacturers before the commencement of the new excise duty regime.
The Minister of Finance, Mrs Kemi Adeosun, said on Sunday that the new rate on tobacco is a combination of the existing ad-valorem base rate and specific rate while the ad-valorem rate was replaced with a specific rate for alcoholic beverages.
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For alcoholic beverages, the current ad-valorem rate will be replaced with specific rates and spread over three years to moderate the impact on prices.
This will curb the discretion in the Unit Cost Analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages.
According to the minister of Finance, Mrs. Kemi Adeosun, “yor Tobacco, the government will maintain the current ad-valorem rate of 20 per cent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices”.
Under the newly approved excise duty rates for tobacco in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.
Adeosun further explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in the Gambia.
The new specific excise duty rate for alcoholic beverages cuts across beer and stout, wines and spirits for the three years 2018 to 2020.
Under the new regime, beer and stout would attract N0.30k per centilitre (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020.
Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020. NAN
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