The Nigerian government has announced an additional ₦10 excise duty tax on all non-alcoholic, carbonated, and sweetened beverages per litre.
Zainab Ahmed, Minister of Finance, Budget, and National Planning, stated that the tax was imposed by the government to discourage the consumption of carbonated beverages such as Coca-Cola, Pepsi, Sprite, and other sweetened beverages that are associated with excessive sugar-related illnesses such as obesity and diabetes.
According to reports, approximately four million Nigerians have diabetes caused by excessive sugar consumption.
The minister made the revelation today in Abuja during the presentation of the 2022 budget breakdown. The new tax legislation is included in the government’s 2021 Finance Act.
In addition to raising more revenue for health expenses and other critical expenses, the government considers the new measure as a budget priority for 2022.
However, the Manufacturers Association of Nigeria and economic experts have warned that imposing a new tax on carbonated beverages would be counter-productive.
MAN had commissioned a report outlining the consequences of reintroducing excise duty on carbonated beverages, warning that it would be counterproductive and result in revenue loss for the government.
The report, titled “key considerations against excise on non-alcoholic beverages”, projected that the government could collect ₦81 billion in revenue from excise duty on carbonated drinks between 2022 and 2025, but lose N197 billion from other taxes levied on soft drink manufacturers, such as Value Added Tax and Company Income Tax.
According to the report, imposing excise duty would cause the beverage sub-sector of the food and beverage industry to lose up to ₦1.9tn in sales revenue between 2022 and 2025, with simultaneous negative effects on jobs and supply chain businesses.
The Director-General of MAN, Segun Ajayi-Kadir said, “I would like to say that the introduction of excise duty of ₦10/litre on non-alcoholic, carbonated and sweetened beverages, despite its potential overwhelming negative impact is rather unfortunate“.
He emphasized that the excise duty tax would affect the sub-sector, which has made significant contributions to the economy and taxes despite the debilitating effects of naira depreciation, forex inadequacy, and the COVID-19 pandemic.
He also stated that the government’s revenue goals may not be met in the long run.