‘SSB tax increase will erode reforms gains’
The Federal Government has been urged to reject the proposal for additional taxation on sugar-sweetened beverages (SSB) as such is misaligned with Nigeria’s current economic realities, inconsistent with ongoing tax
- By Muyiwa Lucas
The Federal Government has been urged to reject the proposal for additional taxation on sugar-sweetened beverages (SSB) as such is misaligned with Nigeria’s current economic realities, inconsistent with ongoing tax reforms and particularly unjustifiable given the extraordinary energy cost pressures confronting the industry.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, in a policy statement, therefore called on the National Assembly to discontinue any legislative consideration of such a tax.
Yusuf further noted that at this critical stage of Nigeria’s economic recovery, the policy imperative should be to support businesses, protect jobs, and strengthen growth and not impose additional tax burdens on an already strained sector.
The CPPE, an economic and policy think-tank group, said that at a time when beverage manufacturers are grappling with surging fuel costs, weak demand, and shrinking margins, additional taxation would undermine business sustainability, threaten jobs across the value chain, discourage investment and further weaken consumer welfare.
Yusuf, an economist, explained that while the current administration has rightly earned commendation for its commitment to tax reform, particularly its focus on reducing multiplicity of taxes; improving tax administration efficiency, and creating a more investment-friendly fiscal environment, he warned that introducing new sector-specific taxes, especially on a sector already severely impacted by energy cost shocks, would contradict the government’s reform philosophy.
“Policy credibility and consistency are critical for sustaining investment inflows and economic recovery. Therefore, an additional taxation on sugar-sweetened beverages will create policy uncertainty, send negative signals to investors and undermine confidence in Nigeria’s manufacturing sector,” he warned.
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According to the CPPE boss, the call for additional taxation on SSB as canvassed by the Corporate Accountability and Public Participation Africa (CAPPA) is ill-conceived, poorly timed, and inconsistent with the current administration’s tax reform agenda, which is anchored on reducing the burden of taxation on businesses, improving tax efficiency, and stimulating investment.
“At a time when the Nigerian economy is still navigating a fragile recovery, the imposition of new taxes on the manufacturing sector—particularly a highly energy-intensive segment such as the sugar-sweetened beverage industry—would be profoundly counterproductive and disruptive to growth, employment, and investment,” Yusuf argued.
He contended that the Nigerian business environment remains extremely challenging, as evidenced in key macroeconomic indicators which underscore the vulnerability of firms. For instance, the CPPE noted that inflation has remained elevated, significantly eroding consumer purchasing power, while interest rates are at historic highs, with the Monetary Policy Rate (MPR) at over 26.5 per cent, translating to lending rates of over 30 per cent for many businesses.
“Energy costs have surged sharply, with diesel prices rising by over 70 per cent, while petrol prices have increased by over 200 per cent in the past two years, making self-generation of power prohibitively expensive amid weak grid electricity supply. Besides, the exchange rate depreciation at the onset of the reforms significantly increased the cost of imported inputs and raw materials. Therefore, within this context, the manufacturing sector—including the food and beverage industry—has come under intense strain, being one of the most energy-dependent sub-sectors in manufacturing,” Yusuf explained.
Although the CPPE acknowledged the rising incidence of non-communicable diseases such as diabetes, the group nonetheless emphasised that taxation of SSB is not a silver bullet for addressing these concerns. It stressed that public health outcomes are primarily influenced by broader lifestyle factors, including dietary habits across multiple food categories, physical inactivity and overall consumption patterns.
Therefore, it said, singling out a highly energy-stressed industrial segment for punitive taxation is neither equitable nor effective. Rather, the group said a more sustainable approach to tackling the health concerns should focus on public health education and awareness campaigns, promotion of healthy lifestyles and physical activity, improved access to preventive healthcare services and constructive stakeholder collaboration with industry players.
