FG to impose new sin tax on tobacco in June

17 Apr FG to impose new sin tax on tobacco in June

The Federal Government has announced that the new tax regime for tobacco will be implemented from June 1, 2022.

Director of Technical Services, Federal Ministry of Finance, Fatima Hayatu broke the news 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 called the tobacco industry a powerful one, assuring that the ministry is committed to checkmating illicit flow of the product into the market.

She hinted that plans were underway to engage relevant stakeholders to implement a robust track and trace system.

The Government is set to constitute a tobacco tax working group to study what other ECOWAS countries are doing.

The director said the taxation on a stick of cigarette was N2.90kobo, but has now increased to N4.20kobo.

This followed ECOWAS recommendation of 0.02cents per stick of cigarette which, at the current exchange rate, would give N8.40kobo.

“However, it was agreed to meet the recommendation half-way which would give N4.20kobo starting from 2022.

“Then in 2023, and additional 50kobo would be added to make N4.70kobo then in 2024, 50kobo would be added to make it N5.20kobo.

“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 is 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.

“Shisha will also be taxed by N3,000 per liter, N1,000 per Kg and it will be increased by N500 yearly”, Hayatu disclosed.

In his remark, Anya urged the Federal Government to include shisha pots and other electric smoking devices in the new tobacco tax regime.