Renewed calls for additional sugar-specific tax, economically risky, CPPE warns

The Centre for the Promotion of Private Enterprise (CPPE) has expressed concern over renewed calls, in some quarters, for the imposition of additional taxes on sugar-sweetened non-alcoholic beverages,  describing the development as economically risky.

The organisation, in a statement signed by its Chief Executive Officer, Dr. Muda Yusuf, on Wednesday, noted that, while public health challenges, such as diabetes and cardiovascular diseases,  warrant urgent attention, it, however, argued that the proposition of a sugar-specific tax is misplaced and weakly supported by empirical evidence.

The Centre added that such call for sugar taxation is not adequately contextualised within Nigeria’s prevailing structural, social, and macroeconomic realities.

According to the Centre, advocacy for sugar taxation is largely driven by externally derived policy templates, particularly those associated with global health institutions.

It believed global best practice would not support sugar taxation as a sustainable or standalone solution to non-communicable diseases, especially in economies characterised by high inflation, weak purchasing power, fragile industrial recovery, and widespread poverty, such as Nigeria’s.

CPPE noted that while the nation’s food and beverage industry remains the largest and most dynamic segment of the manufacturing sector, with the non-alcoholic beverages sub-sector playing a particularly significant role, it also remains one of  the most heavily taxed and cost-pressured businesses in the Nigerian economy.

“Some of the existing fiscal obligations include: 30 percent Company Income Tax, 7.5 percent Value-Added Tax (VAT), ₦10 per litre Excise Duty, 4 percent National Development Levy on assessable profits, 4 percent FOB Levy on imported inputs, Import duties of 5–15 percent on intermediate raw materials, 0.5 percent ECOWAS Levy, Property Taxes at sub-national levels, Multiple state and Local Government levies.

“These fiscal pressures are further compounded by Nigeria’s challenging operating environment, including high energy costs, prohibitive logistics expenses, exchange-rate volatility, and elevated interest rates.

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“The cumulative effect has been rising production costs, shrinking margins, subdued investment appetite, and higher consumer prices.

Notably, retail prices of many non-alcoholic beverages have already increased by approximately 50 percent over the past two years, significantly eroding affordability even in the absence of any new tax measures,” it stated.

The Centre argued that sugar taxes only deliver limited public health benefits unless embedded within broader, long-term lifestyle, behavioural, and structural interventions.

It added that  the rising incidence of diabetes and related non-communicable diseases is driven primarily by poor overall diet quality, particularly carbohydrate-heavy meals and physical inactivity and sedentary lifestyles, among others.

CPPE, therefore, urged policymakers to prioritise evidence-based, inclusive  and development-friendly alternatives, rather than punitive taxation as being canvassed in some quarters.

The organisation stated further  that introducing additional sugar-specific taxes may reverse recent industrial gains, weaken employment outcomes, and undermine the objectives of ongoing manufacturing-friendly fiscal reforms especially at a time the nation’s economy remains in a delicate recovery phase.