Revenue: World Bank urges Nigeria to Increase Excise Duty of Tobacco and Alcohol to boost income by N600bn

The World Bank has urged Nigeria to grow its revenue significantly and generate N600bn yearly by increasing the excise duties on tobacco and alcohol as recommended in the National Development Update report.

A Senior Tax Specialist of the bank, Rajul Awasthi stated this on at a virtual meeting on domestic revenue mobilisation.

Awasthi noted that Nigeria has one of the lowest excise duty rates on tobacco and alcohol in Africa.

He posited that Nigeria’s duty rate on cigarettes is lower than the standard set by the Economic Community  of West African States.

He called on the Federal Government to either adopt the excise standards for tobacco and alcohol recommended by the ECOWAS or Kenya to boost the country’s revenue from tax.

He further explained that this kind of tax increase will not impact the majority of the population or low income earners but improve the ease of tax compliance monitoring.

“On excise, what we see is that Nigeria has one of the lowest excise rates on alcohol and cigarettes, on cigarettes, they are even lower on the ECOWAS target.

“ So if Nigeria were to adopt the same rate of excise duty that Kenya has adopted, they can raise significant amount of revenue. Similarly, if they are to adopt EOWAS, standard, that will also raise the revue significantly, what is more important is that this two sources will not impinge on consumption growth, in fact these harm goods, so taxing them is actually good from the health perspective.

“Excises on tobacco and alcohol, do not impact the vast majority of people and compliance can be monitored much more easily by the compliance agencies. If the measures outlined in our report are implemented, these excise duty on tobacco and alcohol can raise more that 600bn naira a year.”

He advised Nigeria to embrace tax policies that doesn’t endanger investments, jobs or the growth of the economy