Nigeria: Report Recommends Higher Taxation of Tobacco Products

Source from:  THISDAY Live‎  11/27/2012

A report unveiled by the Nigerian Institute of Social and Economic Research (NISER), Ministry of Finance, National Bureau of Statistics, Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service (NCS) has called for the imposition of higher taxes on tobacco products in Nigeria as a means to curtail the adverse effects of smoking on human capital development.
 
The study, launched by ECOWAS countries as part of efforts to control the spread of tobacco activities in the region, revealed that the percentage of taxes in the retail price of cigarettes in Nigeria was 32.75 per cent, 50.25 per cent for Cote d'Ivoire, 36.25 per cent for Senegal, and 17.15 per cent in Benin Republic.
 
This, the report disclosed, is low, compared to 78.5 per cent for Germany, 80.4 per cent for France, 76.5 per cent for the United Kingdom and 77.6 per cent for Spain. It added that about 20 billion sticks of cigarettes are consumed in Nigeria annually, costing about N200 billion.
 
The report noted that higher taxes leading to higher tobacco prices would prevent the rising incidences of new smokers, reduce consumption among existing smokers and induce quitting by smokers.
 
It however acknowledged that tobacco companies operating in Nigeria generate a huge amount of revenue for the government through the current five per cent taxation rate, and added that the adverse effect of the product on the country's GDP by productivity loss arising from diseases and disability cannot be overlooked.

At a National Workshop on Tobacco Taxation organised by the ECOWAS Division of the Ministry of Foreign Affairs in Abuja, experts called on the Federal Government to place higher taxes on the profits made by tobacco companies in Nigeria and use the extra funds to treat victims of smoking related illnesses.
 
"The turnover of BATN on which various taxes are being paid varies from about N31.3 billion in 2007 to about N47.1 billion in 2011.company tax has varied over the same period from N1.8 billion in 2007 to about N3.3 billion and declined to N2.2 billion in 2011. VAT has risen from N348 million in 2007 to about N1.5 billion in 2011. Education tax derived from tobacco was highest in 2009 at a value of about N255 million; for other years, the average education tax to the treasury was about N22 million," it stated.
 
The report accused BATN, which controls nearly 80 per cent of Nigeria's cigarette market, of promoting and canvassing weak tobacco legislation and undermining health policies. Endite