- Layering Another Tax On Beverage Industry Would Be Profoundly Counterproductive
A storm is brewing over proposals to slap an additional tax on sugar-sweetened beverages (SSBs), as the Centre for the Promotion of Private Enterprise (CPPE) has branded the idea “punitive, ill-timed, and a direct threat to Nigeria’s fragile recovery.”
Speaking in Lagos on Tuesday, CPPE Chief Executive Officer, Dr. Muda Yusuf, warned that the move would cripple Nigeria’s fragile economic recovery.
“At a time when businesses are battling unprecedented cost pressures, layering another tax on the beverage industry would be profoundly counterproductive,” he said.
According to Yusuf, Nigeria’s manufacturers are already reeling from soaring inflation, record-high interest rates, and skyrocketing energy costs with diesel prices having jumped by over 70 percent, petrol by more than 200 percent in two years, while lending rates hover above 30 percent.
“The beverage industry is one of the most energy-intensive sectors. From water purification to bottling and refrigeration, every stage consumes massive power. Adding a sugar tax now is simply punitive,” Yusuf stressed.
Industry data shows beverage prices have risen by more than 50 percent in the past two years, while sales volumes have plummeted. Many small and medium-scale producers are said to be “under existential pressure.”
The food and beverage sector is Nigeria’s largest manufacturing employer, supporting agriculture, logistics, retail, and hospitality. CPPE warned that a new tax could trigger factory closures, job losses, and disruptions across agricultural supply chains.
“This is not just about big companies. Vulnerable SMEs will be the first casualties,” Yusuf cautioned.
While acknowledging rising cases of diabetes and other non-communicable diseases, CPPE argued that taxation is not a silver bullet.
“Public health challenges require education, lifestyle interventions, and preventive healthcare. Singling out one sector for punitive taxation is neither equitable nor effective,” Yusuf said, noting that global evidence on sugar taxes shows “mixed outcomes.”
The economic think-tank praised the administration’s ongoing tax reforms aimed at reducing multiplicity of taxes and improving efficiency. But it warned that introducing new levies would undermine investor confidence.
“Policy credibility is everything. Sending contradictory signals will only scare away investment,” Yusuf declared.
CPPE urged the Federal Government and National Assembly to reject the proposal outright.
“The imperative now is to support businesses, protect jobs, and strengthen growth—not impose additional burdens on an already strained sector,” Yusuf concluded.
