PricewaterhouseCoopers, PwC, the top management and financial consulting firm in the world, has urged the Federal Government to improve the difficult operating environment in the nation before enacting the proposed 20 percent excise tax on soft drinks. This is done in order to prevent the manufacturing sector’s collapse, the loss of jobs, and additional suffering for Nigerians at the bottom of the economic ladder.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, commented on the existing tax burden on the beverage industry and the proposed new tax. He also said that the government should take into account the poor and the impact of the policy on the economy, regardless of the recommendations made by the World Bank, IMF, or ECOWAS committee.
He said: “We know the government needs money because it does not have enough to fund critical infrastructure, overheads and the rest of them. However, the best thing to do is to strike a balance. That delicate balance, as to what you task, what rate of tax would be appropriate and when should you impose that tax”?
Olufemi Awoyemi, the founder and chairman of Proshare Limited, also commented on the matter. He said that while he agrees that the government needs money, the ad-valorem tax is the only explanation that is illogical.
He claimed that the N10 per litre excise tax on non-alcoholic beverages that soft drink companies have paid is a tax on both production and consumption, and that it has a negative knock-on effect on manufacturers who in turn have trouble passing along the cost of their goods to consumers.
“If the revenue of the manufacturing companies declines, with the -25 percent already being experienced, there would be a layoff of workers, and it would lead to many other macroeconomic headwinds”.