Call for Harmonisation: Why Nigeria Needs Unified, Evidence-based Excise Policy

Chudy Uwadiegwu

The ongoing legislative move to dramatically amend the Customs and Excise Tariff (Consolidation) Act, specifically by raising the Sugar-Sweetened Beverage (SSB) excise tax from the current N10 per litre to as high as N130 per litre, is a fiscal and policy flashpoint that demands national introspection.

Pitched as a public health imperative, this proposed amendment, sponsored by Senator Ipalibo Harry Banigo, has ignited a fierce, and worryingly disjointed, debate.

The initial N10 per litre SSB tax introduced in 2022 was widely hailed as a pro-health measure intended to curb the rising tide of non-communicable diseases (NCDs) like diabetes and hypertension.

However, the proposed amendment to Section 21(3) of the Customs and Excise Tariff Act advocates raising the excise tax on SSBs based on a percentage-based system calculated on retail prices and the subsequent clamour for a 1,200% hike, largely driven by public health advocacy groups, risks becoming a classic case of policy overreach driven by emotion rather than context-specific data.

The bill has generated divergent views among stakeholders. Proponents, backed by the Minister of Health, cite global best practices and local studies suggesting such an increase could significantly reduce per-capita SSB consumption and generate substantial revenue for the ailing health sector. This is a compelling, humanitarian argument.

Yet, the counter-arguments from the Organised Private Sector (OPS), which includes major stakeholders like the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and others, are too significant to ignore.

They warn that such a punitive, one-size-fits-all tax could lead to deindustrialisation, massive job losses (affecting an estimated 1.5 million direct and indirect jobs), and a collapse of the local beverage industry already reeling from foreign exchange volatility and inflation. Furthermore, they underscore that the amendment introduces “mathematical, legal and administrative contradictions” that make consistent implementation practically impossible. This well-intentioned policy risks being undermined by the lack of a comprehensive, harmonised framework that balances health priorities with economic realities.

The core of the issue is not whether a tax should exist, but how it should be designed. The tax rate should be determined by an evidence-based approach, which is superior because it provides not just a scientific justification but also a strong incentive for beverage companies to reformulate their products without exiting the formal market.

Arbitrarily fixing a punitive flat tax – with studies conducted by some anti-SSB advocacy organisations showing that an excise adjustment to N130 per litre could raise retail prices by 39 per cent, potentially reducing per capita consumption by 29 per cent – shrinks the formal market, pushes consumers toward cheaper, unregulated, and potentially unhealthier alternatives, and risks trading formal sector jobs for black market substitutes.

In a country grappling with inflation, unemployment and fragile industrial growth, these concerns cannot be dismissed as mere lobbying. The proposed amendment, advanced in part without full alignment with other fiscal and industrial policies, threatens to create severe disruptions to the SSB value chain, from manufacturers and distributors to small-scale vendors. A balanced approach is, therefore, essential, one that mitigates health risks without strangling an industry that supports thousands of jobs and contributes significantly to GDP. A policy that destroys a significant contributor to non-oil GDP for an unproven health gain is fiscal recklessness.

Perhaps the most troubling aspect of this amendment push is the evidence of gross policy incoherence and the visible misalignment between the Executive and Legislative arms of government on tax administration. The executive arm, through the Ministry of Finance, has consistently maintained that Section 13 of the existing CETA Act empowers the President to impose, vary or remove excise duties as needed to respond to macroeconomic realities and international obligations. Conversely, the National Assembly is attempting to assert its constitutional authority to amend the law and earmark funds for health programmes.

In addition, the federal government, through the Nigerian Sugar Master Plan (NSMP), has invested billions to promote and subsidise local sugar production, aiming for backward integration. However, the National Assembly, through this proposed amendment, is aggressively strangling the primary industrial demand for that very sugar.

This tug-of-war over authorising power risks creating parallel agendas. This parallel agenda not only burdens the SSB industry but also fractures the entire tax framework, distracting from the holistic overhaul needed to simplify and unify Nigeria’s tax system, as currently championed by the Presidential Fiscal Policy Committee. This is a textbook definition of fiscal schizophrenia, sending confusing signals to domestic and international investors and undermining President Bola Tinubu’s stated agenda of stability and ease of doing business.

This would also expose businesses to compliance chaos and litigation. Worse still, it could discourage investment in the beverage sector, a space already under pressure from rising input costs, heavy taxation and currency volatility. Moreover, earmarking excise revenue for health programmes through legislation, while noble in intent, raises practical concerns about fiscal flexibility. Public health financing should be robust, but it must also adapt to changing economic conditions. Locking funds into rigid statutory allocations could constrain the government’s ability to respond to emergencies or reallocate resources when priorities shift.

Nigeria does not need a fragmented excise regime where fiscal and health objectives pull in opposite directions. What the country needs is a unified, evidence-based excise policy framework, one that integrates health priorities into fiscal planning without undermining economic competitiveness or governance principles. Such a framework should be developed collaboratively by the executive, the National Assembly, industry stakeholders, and public health experts, ensuring that decisions are informed by data, not emotions or populist rhetoric. It is not a policy that should be made unilaterally or hastily.

One of the ways of ensuring it is done through a catalysed process is for all stakeholders to abandon superficial arguments and commission an independent, joint health and economic impact study. This study must evaluate the actual price elasticity of demand for SSBs in Nigeria, the true impact on NCDs among the primary consuming demographic and the quantifiable impact of various tax rates on jobs and the GDP contribution of the beverage value chain.

Also, any future excise tax rates must be grounded in empirical research, balancing health objectives with economic sustainability. It must be tiered and specific, based on grams of added sugar per unit volume, leading companies to embrace reformulation, which is the proven global mechanism for health gains.

The bill’s vision to earmark revenue for primary healthcare and disease prevention is commendable, but requires robust monitoring mechanisms involving civil society, the organised private sector and independent auditors to ensure that the funds are truly utilised for public health initiatives, such as primary healthcare funding, and NCD screening and treatment.

This prevents fund mismanagement and builds public trust in the proposed excise framework.

The choice is ours. Let us choose coherence over chaos, evidence over emotion and collaboration over conflict.

Chudy Uwadiegwu, is an Abuja- based public affairs commentator.