The Federal Government of Nigeria has announced its new tax regime of an initial N4.20 kobo on tobacco products which will be implemented from June 1, 2022. This is in line with its earlier projection of enhanced revenue mobilization while curbing illegal products imports into the economy.
Director of Technical Services, Federal Ministry of Finance, Fatima Hayatu stated this development at a meeting with the Civil Society Legislative Advocacy Centre (CISLAC).
The Programme Manager on Democratic Governance, Okeke Anya, led the organisation’s Tobacco Taxation Working Group.
Hayatu referred to the tobacco industry as a powerful one, while assuring that the Ministry is committed to checkmating illicit flow of the product into the market. She also hinted at the plans to engage relevant stakeholders to implement a robust track and trace system as the government is set to constitute a tobacco tax working group to study what other ECOWAS countries are doing.
According to the new tax regime, the director noted the taxation on a stick of cigarettes was N2.90kobo but has now increased to N4.20kobo, which was in response to ECOWAS recommendation of 0.02 Cents per stick of cigarette which, at the current exchange rate, would give N8.40kobo.
“However, it was agreed to meet the recommendation halfway which would give N4.20kobo starting from 2022.
“Then, in 2023, an additional 50kobo would be added to make N4.70kobo then in 2024, 50kobo would be added to make it N5.20kobo,” Hayatu stated.
In furtherance of the new tax, she said: “These will all reflect the current increase of the Ad Valorem from 20% to 30%. This is a gradual increase in the tax, and all are currently in review.
“The increase in tax/levies will not only be for tobacco products, but for others such as shisha, similar classification, the apparatus used to convey and consume them meanwhile Shisha will also be taxed by N3,000 per liter, N1,000 per Kg and it will be increased by N500 yearly.”
Anya, in his remarks at the forum, urged the Federal Government to include shisha pots and other electric smoking devices in the new tobacco tax regime.
The CISLAC official said this would crash their demand and increase revenue for the country.
“Tobacco has a devastating effect on the health of Nigerians,” adding that it should be well taxed as a luxury good.
He stated: “The tax increase will be an avenue to generate revenue. This is how many countries operate because consumption of tobacco is a luxury and not a necessity.”
Anya as well emphasised that Nigerians would like to know the tobacco products that have paid the right tax duties and where they come from.