High Tax On Sweetened Beverages Will Boost Excise Revenue By 972% – Report

If the federal government peg the Sugar-Sweetened Beverage (SSB) tax at a rate of N130 per litre, it would lead to a substantial increase of excise tax revenue to N729 billion, representing 972 per cent increment, a new report has disclosed.

The report titled: “Potential Fiscal and Public Health Effects of Sugar-Sweetened Beverage tax in Nigeria,” uses data from a dedicated survey conducted by the Centre for the Study of the Economies of Africa (CSEA) in 2023 on SSB consumption patterns in Nigeria.

Findings of the report showed that beyond public health benefits, the SSB tax increase presents a unique opportunity to bolster government revenue, while estimating that implementing the SSB tax in Nigeria could result in a substantial in tax revenue. “Specifically, revenue from this excise tax is estimated to rise by 972 per cent (amounting to N729 billion),” it added.

This additional revenue could be strategically allocated through earmarking to strengthen the country’s Healthcare system, particularly basic healthcare, which it currently grapples with inadequate funding, the report suggested.

Sequel to the findings, the report suggested other policy recommendations to address the growing SSB consumption crisis in Nigeria. It advises the Nigerian government to consider a significant increase in the existing SSB tax rate, potentially setting it at a minimum of N130 per litre. 

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“This tax increase is estimated to stringer a substantial price surge of 39 per cent increase per litre, thereby discouraging consumption effectively by about 29 per cent annually. In order to ensure persistent health gains from the SSB tax, it is very important to regularly review the tax rate upward while accounting for inflation effect.

“Also, comprehensive awareness campaigns should be initiated to educate the public on the benefit of the tax and the health risks of excessive SSB consumption.

Meanwhile, the executive director of Corporate Accountability and Public Participation Africa, CAPPA, a human rights group, Mr. Akinbode Oluwafemi,  tells me that with the current inflation rate, the N10 per litre imposed on SSBs in 2021 is today possibly worth less than 4kobo, because it was a fixed tax, not adjustable to inflation.

In essence, the SSB tax needs to be increased significantly in the 2024 Fiscal Act, with a framework that is adjustable to inflation as we also begin the conversation about earmarking the tax or a sizable portion of it for public health, Oluwafemi averred.