Stakeholders divided over excise duty hike on sweetened beverages

Disagreement erupted on Thursday among health and finance stakeholders over the Senate’s proposed increase in excise duty on carbonated sugar-sweetened beverages (SSBs).

The Senate Committees on Finance and Customs held a public hearing to consider a bill introducing a percentage-based levy per litre to discourage high sugar consumption.

Daily Trust reports that the proposal for an upward review of Sugar-Sweetened Beverages (SSBs) has continued to generate controversy in the polity with stakeholders sharply divided over it.

The proponents argued that raising the tax became imperative due to the real economic cost of over-consumption of SSBs and on public health and citizens’ wellbeing.

Chairing the session on Thursday, Senator Sani Musa (APC, Niger East), noted that opinions were divided.

The Coordinating Minister of Health, Professor Muhammad Ali Pate, endorsed the bill, describing it as an evidence-based strategy for public health financing.

He advocated increasing the current N10 per litre excise tax to at least 20% of retail price and earmarking 40% of revenue for prevention of diet-related diseases.

While health groups such as the Nigeria Cancer Society and Diabetes Association supported the bill, the Manufacturers Association of Nigeria, Ministry of Finance, and NECA opposed it.

MAN argued that higher duties could threaten jobs and disputed links between SSBs and obesity or diabetes.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, represented by Boshir Adonkadu, Director of Technical Services, confirmed the ministry’s support for the amendment to Section 21(3) of the Customs and Excise Tariff Consolidation Act, first introduced through the Finance Act 2021.

He, however, stressed that Section 13 of the existing law already empowers the President to impose, vary or remove excise duties as needed to respond to macroeconomic realities, regional agreements and international treaties.

Edun also disclosed that the ministry is developing an Excise Tax Policy Framework designed to curb the consumption of harmful products, reduce related health risks and mobilise sustainable revenue for health and social programmes. The framework, he said, will align with national and regional public health goals.

While supporting the idea of funding health interventions through SSB tax revenue, the minister opposed legislatively earmarking such funds.

Instead, Edun recommended that allocations be handled administratively through presidential approval and expanded to include excise proceeds from alcohol and tobacco.

On its part, the Corporate Accountability and Public Participation Africa (CAPPA) urged the National Assembly to adopt a stronger, percentage-based excise tax on sugar-sweetened beverages (SSBs) as lawmakers review Nigeria’s current levy.

The pan-African civil society organisation in its memorandum called for a retail-price–based excise structure set at 50 percent, with a compulsory minimum floor of 20 percent, in line with World Health Organisation (WHO) standards and recommendations from the Bloomberg Task Force on Fiscal Policy for Health.

It argued that this level of taxation is necessary to meaningfully curb consumption. It further advocated the earmarking of SSB tax revenues for public-health programmes, especially the prevention and management of non-communicable diseases (NCDs), noting that such dedicated funding would strengthen Nigeria’s overstretched health system.

It maintained that revising the current N10 per litre charge is not only constitutionally sound and economically sensible but also aligned with Nigeria’s international health commitments. According to the group, the existing fixed duty has lost its value and effectiveness.

“A percentage-based levy that reflects real market prices is the only credible path to restoring the impact of this policy,” CAPPA stated, adding that a strengthened 50 percent benchmark would reduce consumption, push manufacturers towards healthier product reformulation, and produce measurable health benefits.

In his final remarks, Senator Musa who chaired the session assured stakeholders that any legislation presented would be fair, transparent, and people-oriented.

OPS seeks bill’s withdrawal

Meanwhile, the Organized Private Sector of Nigeria (OPS) has urged the National Assembly to withdraw the proposed amendment to the Customs, Excise and Tariff Bill and maintain the current excise rates on Non-Alcoholic Drinks (NADs).

According to the body, the current draft of the bill is misaligned with the Federal Government’s fiscal reform direction and contains several legal and administrative gaps.

In the position paper presented by the OPS at the public hearing, the OPS explained that the NAD sector is committed to supporting government revenue and public health objectives.

“However, policies must be holistic, harmonised, and context-appropriate, ensuring that they improve health outcomes without undermining jobs, investment, affordability, or industrial stability,” the body said.

The OPS maintained that Nigeria’s excise framework is “increasingly fragmented, as new levies are introduced without coordinated assessment of their combined effects on production, investment, backward integration, employment, exports, and inflation, which may result in unintended consequences negating President Tinubu’s administration’s key economic reforms without delivering measurable public health gains.”

It argued that a steep excise increase or introduction of a levy would impose substantial economic costs on businesses and consumers without delivering measurable public health gains.

The group stated that the proposed excise amendment introduces mathematical, legal, and administrative contradictions, worsens Nigeria’s already fragmented fiscal environment, and directly conflicts with national industrialisation priorities, including the Nigeria Sugar Master Plan.

OPS also warned that the amendment could weaken the beverage value chain, one of the country’s most significant contributors to non-oil revenue and a major employer.

“Nigeria’s non-alcoholic drinks sector is a critical economic stabiliser, supporting 1.5 million jobs, driving backward integration under the NSMP II, and contributing 40 – 45% of gross revenues as taxes and yet already operating under severe macroeconomic strain and thin margins”, said OPS.

The group stated that the proposed excise amendment introduces mathematical, legal, and administrative contradictions, worsens Nigeria’s already fragmented fiscal environment, and directly conflicts with national industrialisation priorities, including the Nigeria Sugar Master Plan.

OPS also warned that the amendment could weaken the beverage value chain, one of the country’s most significant contributors to non-oil revenue and a major employer.

Industry experts added that the levy would push up operating costs, reduce capacity utilisation, and raise consumer prices at a time when households and small businesses are already under pressure, with many slipping deeper into poverty.

According to the group, given that the beverage industry falls among the non-oil revenue contributors, passing the bill into law could undermine the administration’s ease of doing business objectives at such a sensitive economic period.

“The amendment bill contains internal contradictions (“20% levy per litre of retail price”) that are impossible to implement consistently. Over-taxation may shrink the formal sector, reduce VAT and CIT collections and shift consumers to informal markets. The bill may cut medium- term FAAC distributions and weaken state-level revenue stability,” OPS added.

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