Firm warns against steep tax hike on sugary drinks

A Nigerian policy firm has cautioned against a proposed significant increase in taxes on sugary drinks, warning that it could raise prices for consumers and production costs without achieving the desired public health outcomes. The firm, ThinkBusiness Africa, released a report titled 'Nigeria’s CETA Bill, Fiscal Policy, and Health Outcomes,' which examined the Senate's proposed amendment to the Customs, Excise Tariff (Consolidation) Act.

This amendment would replace the current ₦10-per-litre excise duty with a levy tied to retail prices, determined by the Finance Minister. The report cautioned that this change should be evaluated in the context of Nigeria's broader fiscal, economic, and public health objectives. While acknowledging the serious concerns around diabetes, obesity, and hypertension, the firm noted that the evidence on the effectiveness of taxes on sugary drinks is mixed and requires further scrutiny.

They argued that reducing purchases of sugary drinks does not necessarily lead to a reduction in obesity, diabetes, or hypertension, as these chronic diseases are influenced by various factors. The firm urged policymakers to differentiate between the immediate behavioral effects of taxation and longer-term population health outcomes when assessing the proposed reform.