Participants at Senate hearing divided over proposal to increase tax on sugar-sweetened beverages

Participants at a public hearing on the proposed amendment to the Customs and Excise Tariff (Consolidation) Act on Thursday expressed divergent views on the proposal.

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The amendment to Section 21(3) of the Act seeks to raise the Sugar-Sweetened Beverage (SSB) excise tax from ₦10 per litre to ₦130 per litre.

The proposal also recommends earmarking a portion of the revenue generated from the excise tariff for health promotion and disease prevention programmes.

The hearing was jointly organised by the Senate Committees on Finance and Customs.

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While some stakeholders backed the proposal, arguing that the increase aligns with the World Health Organisation’s recommendation of at least a 20 per cent rise in retail prices of SSBs, others warned that it could lead to job losses in the manufacturing sector.

Arguments for the Increment

Coordinating Minister of Health and Social Welfare, Muhammad Pate, was among the major advocates of the proposed increase.

He argued that the amendment could significantly reduce cases of diet-related non-communicable diseases (NCDs) such as obesity, diabetes, cardiovascular diseases, cancer and dental caries.

Mr Pate, a professor, said local studies show that increasing the tax to ₦130 per litre could raise retail prices by about 39 per cent and potentially reduce annual per-capita SSB consumption by 29 per cent.

He added that the government could secure at least 40 per cent of the revenue generated to fund public health programmes.

“The ministry’s proposal for an increase in the current SSB excise tax from ₦10 per litre to ₦130 per litre is based on local studies by the Corporate Accountability and Public Participation Africa (CAPPA) in 2024, which aligns with the WHO recommendation.1 CAPPA found that adjusting the current SSB excise tax to ₦130/L could significantly increase the retail price of SSBs by approximately 39 per cent, which could lead to a corresponding annual decrease in SSB per capita consumption by 29 per cent, ” he said.

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The minister noted that Nigeria ranks 4th globally in SSB consumption, with annual sales of about 38.6 million litres and a projected market value growth of 16.63 per cent in 2023.

He also highlighted that SSB consumption rose by 72 per cent across sub-Saharan Africa and by 123 per cent in Nigeria between 2008 and 2022.

“Similarly, hypertension is a large and growing problem, with a prevalence of 29 per cent – 38% among adult Nigerians. On the other hand, it is estimated that 127,763 new cancer cases occur annually, resulting in about 79,542 deaths,” the minister added.

Representatives of the Nigerian Cancer Society and the Diabetes Association of Nigeria also supported the proposal.

Arguments against the increment

The Manufacturers Association of Nigeria (MAN) opposed the amendment.

Adeyemi Folorunsho, a director in the association, argued that the proposed increase could trigger job losses in the manufacturing sector and urged lawmakers to exercise caution.

He also disputed claims linking SSB consumption to diabetes, obesity and related diseases, stating that Nigeria allegedly has one of the lowest sugar-consumption rates globally, 8.3 million kilograms compared to the 22.1 million kilograms it “should” be consuming.

“Contrary to erroneous belief, Nigeria has the lowest rate of sugar consumption in the world which is 8.3 million kilogrammes as against 22.1 million kilogrammes that it’s supposed to be,” he argued.

In his closing remarks, the Joint Committee Chairman, Sani Musa (APC, Niger East), assured stakeholders that the committee would conduct its deliberations on the proposed amendment in a fair, transparent, and public interest-guided manner.