Business leaders reject proposed beverage tax hike

OPSN Urges Federal Government to Withdraw Customs, Excise and Tariff Bill Amendment

The Organised Private Sector of Nigeria (OPSN) has called on the Federal Government to withdraw the proposed amendment to the Customs, Excise and Tariff Bill, warning that the move could derail President Bola Tinubu’s fiscal reform agenda and worsen Nigeria’s already fragile tax structure. The appeal was made during a public hearing held on Thursday.

OPSN, which includes top industry groups such as the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), National Association of Small and Medium Enterprises (NASME), and the National Association of Small Scale Industrialists (NASSI), urged lawmakers to maintain the current excise rates on non-alcoholic beverages.

In its detailed position paper, the OPSN argued that the proposed amendment is “misaligned with the Federal Government’s fiscal reform direction” and contains several legal, mathematical, and administrative inconsistencies. The group emphasized that although the non-alcoholic beverage sector contributes significantly to government revenue and public health initiatives, policies must be holistic, harmonised and context-appropriate to prevent disruptions to jobs, investments and industrial stability.

The OPSN expressed concern that Nigeria’s excise tax system has become increasingly fragmented, with new levies frequently introduced without assessing their combined impact on production, investment, backward integration, employment, exports and inflation. It warned that steep excise hikes or the introduction of new levies could place additional burdens on companies and consumers without providing measurable public health benefits.

According to the group, the amendment directly conflicts with several national priorities, including the Nigeria Sugar Master Plan. It further warned that the proposal could destabilize the beverage value chain—one of Nigeria’s strongest contributors to non-oil revenue and a major employer of labour.

The OPSN noted that the new levy would raise production costs, reduce factory capacity utilisation, and increase retail prices—at a time when households and small businesses are already struggling with economic pressures. These effects could reduce Value Added Tax (VAT) and Company Income Tax (CIT) revenue collections, ultimately threatening medium-term allocations from the Federation Account Allocation Committee (FAAC).

The group highlighted the sector’s contribution to national development, stating that the non-alcoholic beverage industry currently supports 1.5 million jobs, drives backward integration efforts under NSMP II, and contributes between 40–45 per cent of gross revenues as taxes—despite operating under enormous macroeconomic strain and tight profit margins.

They further criticised the National Assembly for pushing forward with the bill despite what they described as insufficient coordination with key stakeholders such as the Ministry of Finance, the Presidential Fiscal Policy & Tax Reform Committee, and the FAAC. The OPSN stressed that the amendment contradicts the President’s commitment to ensuring stability, predictability, simplification, and a non-disruptive tax system.

The group cited both local and global evidence demonstrating that steep or poorly structured Sugar-Sweetened Beverage (SSB) taxes in developing countries often result in job losses, reduced micro and small enterprise activity, declining tax revenues, and little to no improvement in public health outcomes. Instead, such measures tend to widen inequality and push consumers toward cheaper informal market options.

Highlighting contradictions within the bill, including the ambiguous clause on a “20 per cent levy per litre of retail price,” the OPSN argued that such provisions are difficult to implement and risk shrinking the formal sector. This could ultimately weaken FAAC allocations and destabilize state-level revenue streams.

Despite its strong objections, the OPSN stated its willingness to continue engaging with the National Assembly, fiscal authorities, and civil society organizations to ensure that any future changes to the excise regime promote long-term investment, job creation, and revenue stability.

Meanwhile, advocacy groups such as the Corporate Accountability and Public Participation Africa (CAPPA) have continued to campaign for a substantial increase in sugar-sweetened beverage taxes—from the current ₦10 per litre to ₦130. CAPPA insists that a 1,200 per cent hike is necessary to curb rising cases of noncommunicable diseases, citing findings from its report titled “Evaluating Nigeria’s Sugar-Sweetened Beverage Tax: A Critical Review of CAPPA’s Policy Proposals.”

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