Why lawmakers must take a second look at Excise Bill

By: Olamide Bakare

AT a time when Nigeria is working hard to stabilise its economy, strengthen investor confidence, and rebuild the manufacturing sector, the rapid progress of the Customs, Excise and Tariff Amendment Bill (CETA) deserves closer attention. The bill, which seeks to replace the current ₦10 per litre excise duty on non-alcoholic beverages with a levy tied to retail price, appears to be moving forward without the customary fiscal coordination that such a sensitive change requires. Before introducing any fiscal change of this magnitude, it is essential to examine the evidence. Currently, there is no clear Nigeria-specific research indicating that increasing SSB taxes through the CETA proposal would lead to significant health improvements. Most of the health arguments supporting higher taxes draw from studies in foreign markets with different consumption habits, income levels, and market structures. In Nigeria, where consumers often switch to cheaper, informal, and largely unregulated alternatives, a higher tax may not significantly reduce sugar intake. Without local modelling, impact assessments, or independent public health evaluation, it becomes difficult to justify a policy shift that could impose substantial economic costs while offering uncertain health outcomes.

This gap underscores the need for broad consultations involving health professionals, academia, consumer groups, the private sector, and relevant MDAs. Any excise intervention that seeks to balance fiscal and health objectives must be driven by comprehensive, Nigeria-specific evidence rather than assumptions imported from other countries. Despite these concerns, the bill appears to be moving forward without complete alignment among fiscal authorities. Key bodies, including the Ministry of Finance, the Fiscal Policy and Tax Reform Committee, FAAC, and related agencies, do not appear to have been fully engaged. Without their input, a policy intended to generate revenue may easily conflict with wider economic priorities. This is especially pertinent given President Bola Ahmed Tinubu’s stated commitment to stability, predictability, and the removal of barriers that discourage investment. The administration’s two-year tax reform moratorium aims to protect the economy from abrupt policy changes while the Presidential Fiscal Policy and Tax Reform Committee undertakes a comprehensive review. Introducing a new retail-price-based levy now contradicts that direction and risks adding uncertainty to a sector already under pressure.

The potential economic impact is substantial. The beverage value chain is one of Nigeria’s largest employers, supporting manufacturers, MSMEs, farmers, sugar refiners, distributors, retailers, and logistics providers. It is responsible for an estimated 1.5 million jobs, drives backward integration through the National Sugar Master Plan 2, and contributes roughly 45% of gross revenues as taxes. Yet the sector is already grappling with FX volatility, rising input costs, and high energy prices. A retail-price-based levy would significantly raise operating costs, reduce capacity utilisation, slow investment, and push consumer prices upward. As prices rise, demand weakens, factory operations contract, and jobs come under threat.

There is also a real risk to FAAC revenue. When the formal market shrinks, VAT and CIT collections fall. Consumers tend to shift to lower-cost, informal beverages that are untaxed and unregulated, reducing traceable economic activity. This could leave states facing revenue pressure at a time when their fiscal space is already constrained. Beyond the economic implications, the bill presents legal and administrative inconsistencies. There are further concerns regarding alignment with the Fiscal Responsibility Act. As a member-sponsored bill, it is unclear whether the proposed amendment has undergone the required fiscal coordination, stakeholder consultations, or revenue analysis essential for changes that may affect the Medium-Term Expenditure Framework. Even the Ministry of Finance may not have been fully briefed on its scope or implications. These issues speak to the long-term stability of Nigeria’s fiscal architecture. A retail-price-based excise introduces unpredictability, complicates fiscal planning, and sets a precedent for ad-valorem excise taxes and earmarked revenues—developments that could create challenges for years to come.

Nigeria needs tax reforms, but they must be coordinated, evidence-driven, and aligned with the national economic strategy. The conversation should focus on transparency, predictability, and stability—principles that allow both government and industry to plan responsibly. Following the public hearing, the aim should be to proceed carefully and ensure that any reform is grounded in data and aligned with Nigeria’s broader fiscal direction. Excise policy should not be restructured without the participation of institutions responsible for protecting the country’s economic future. A coordinated and evidence-based approach will better safeguard Nigeria’s interests and prevent unintended consequences that could emerge from a rushed amendment.

•Bakare, a communication practitioner, writes in from Ketu, Lagos.