Nigeria Can Earn N600bn from Tobacco, Alcohol Tax Hike-World Bank


Apex global final institution, the World Bank, has said that Nigeria can generate an annual N600bn revenue from alcohol and tobacco if it leverages on increased tax on the items as recommended in the National Development Update report
The declaration was made on Wednesday at a by one of the institution’s Senior Tax Specialist, Rajul Awasthi, at a virtual discussion on domestic revenue Mobilization. According to Awasthi, the country has one of the lowest excise duty rates on tobacco and alcohol in Africa, with duty rate on cigarettes lower than the standard set by the Economic Community of West African States, ECOWAS.
Awasthi, who advised the Nigerian government to either adopt the region’s excise standards for tobacco and alcohol as recommended by ECOWAS or Kenya in order to boost its tax revenue, added that if raised, accruing revenue rise would not only impact the majority of the population or low income-earners but also 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 a significant amount of revenue. Similarly, if they are to adopt ECOWAS standard, that will also raise the revenue significantly. What is more important is that these 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 duties on tobacco and alcohol can raise more than N600bn a year,” Awasthi disclosed.

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