Firm warns against steep tax hike on sugary drinks

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A Lagos-based policy and investor-relations firm, ThinkBusiness Africa, has advocated an evidence-based assessment of Nigeria’s proposed amendment to the Customs, Excise Tariff (Consolidation) Act.

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It warned that a significant increase in the tax burden on sugar-sweetened beverages could raise consumer prices and production costs without delivering commensurate public health outcomes.

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This was contained in a new policy report, titled ‘Nigeria’s CETA Bill, Fiscal Policy, and Health Outcomes,’ and made available to PUNCH Online on Tuesday,

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According to the firm, the report examines the proposed amendment to the CETA Act, which was passed by the Senate at third reading on June 4, 2026, and is awaiting consideration by the House of Representatives.

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The Senate-approved framework replaces the existing ₦10-per-litre excise duty on sugar-sweetened beverages with a levy linked to retail prices, with the applicable rate to be determined by the Minister of Finance.

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The firm advised that the proposed change should be “assessed against Nigeria’s wider fiscal, economic and public health objectives.”

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The firm agreed that diabetes, obesity and hypertension are serious concerns, but said the evidence supporting taxes on sugary drinks is not straightforward and should be examined more carefully.

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“Reducing purchases is not the same as reducing obesity, diabetes or hypertension,” the report stated, noting that chronic diseases are influenced by multiple factors, including overall diet, physical activity, income, education, access to healthcare and broader living conditions.

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ThinkBusiness Africa urged policymakers to distinguish between the immediate behavioural effect of taxation and longer-term population health outcomes when evaluating the proposed reform.

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It lamented the timing of the proposed reform, given the economic pressures already facing Nigerian households and businesses, saying it could increase costs across the wider value chain, including manufacturing, agriculture, sugar supply, packaging, logistics, transportation, distribution and retail.

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The report cited an estimate by the Manufacturers Association of Nigeria that approximately 1.5 million jobs depend directly or indirectly on the beverage sector. It also referenced data from the National Sugar Development Council showing that total sugar consumption declined from about 1.72 million tonnes in 2022 to 1.44 million tonnes in 2023, while domestic sugar production fell from approximately 46,479 tonnes to 30,053 tonnes over the same period.

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ThinkBusiness Africa stressed that the declines cannot be attributed solely to the existing SSB levy, but said they illustrate the broader pressures confronting the sugar and beverage value chain.

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The report further referenced modelling by the Centre for the Study of the Economies of Africa, cited in a Manufacturers Association of Nigeria submission, which estimated that a ₦130-per-litre tax scenario could increase retail prices by about 39 per cent and reduce annual per-capita consumption by approximately 29 per cent.

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The firm cautioned, however, that a decline in purchases of taxed beverages does not necessarily translate into an equivalent reduction in overall sugar consumption, as consumers may substitute other products.

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ThinkBusiness Africa urged policymakers to undertake a comprehensive review of the existing SSB levy before introducing a substantially higher tax burden.

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“The reform should therefore be assessed not only on its expected revenue and health effects, but also on whether its design is consistent with the wider objective of creating a simpler and more predictable tax system,” the report partly read.

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It also urged policymakers, among others, to examine alternative approaches, including sugar-content-based taxation, pointing to the United Kingdom as an example of a model designed to incentivise manufacturers to reformulate products and reduce sugar content.

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