Nigerian Breweries Plc, International Breweries, and Champion Breweries have decried the N35.8 billion spent as excise duties in nine months, calling on Federal Government to slash the rate.
According to the brewers, the duty, which was fixed at N30 per litre of alcohol, is counter-productive.
For instance, Nairametrics understands that Nigerian Breweries paid about N33.9 billion on excise duty as at March 31, 2019(N25.8b in 2018 and N8.1b in Q1, 2019).
While International Breweries paid N1.53 billion as at September 2018, Champion Breweries spent N311.3million as at December 2018 on excise duty.
Although Guinness Nigeria Plc did not reveal how much it paid on excise duty, sources say it’s almost the same with Nigerian Breweries.
Effects on operations: The Director, Legal and Corporate Affairs of International Breweries, a subsidiary of AbinBev Group, Michael Daramola said that the increment of excise duty rates on alcohol beverages and tobacco by the Federal government is killing the brewery industry.
Daramola lamented that the increment was stifling the growth of the brewery industry as the duty has been increased by about 60% last year.
“We fought against the government’s increment of excise duty but somewhere along the line, the government still went ahead to increase it.
“Excise is a tax that you pass on to the consumers; it is not an absorbable tax. But in the present economic situation of the country, we cannot pass that tax on to the consumers because the purse of the consumers is very lean and people are very price-sensitive, a slight change in price might make them reject the product.
“So we had to absorb the tax and that has really eaten into our bottom line. If you see the results of most of the breweries this year, you will found out that it has eaten far, far into it.”
“Our contention is this, what we are using to absorb that tax is what we should have used to do other things. We should use it to increase our capacity and employ more people but with the increment, we cannot do this, we have to hold on to our present capacity.”Daramola said.
Speaking further, Daramola went on to add that there have been talks with the government to learn about moves to further increase the duty. He said that if it was revenue the government needed, there should be an increase in growth of the economy. According to him, once the government overcharges people, it stifles growth and when there is no growth, no desired results can be achieved.