The federal government is currently looking into a temporary suspension of the N10 tax on Sweetened Sugar Beverages (SSBs) as part of an economic stabilisation plan.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun disclosed this when he met with the members of the National Action on Sugar Reduction (NASR) according to the News Agency of Nigeria (NAN).
The Minister argued that suspension is intended as a temporary relief, with plans to reintroduce the tax once the economy stabilizes.
He compared the arguments against the SSB tax to those made in the past against tobacco taxation, highlighting the importance of data-driven analysis in shaping public policy. He stated that while the government does not support companies selling unhealthy products, it recognizes the need to support businesses and help people cope with the current cost of living.
The minister also emphasized the role of the Presidential Economic Coordination Council in this decision, acknowledging the necessity of government revenue but also the need to offer relief amid economic challenges.
He said, “This measure aims to help beverage companies navigate the current economic difficulties without going under. The temporary suspension of the sugar tax is seen as a measure to stabilise the economy and support the beverage industry during this critical period,” said.
“We support your need for revenue, but we must find a balance. The increase in foreign exchange rates is being passed on to consumers. While the official exchange rate was artificially pegged, products are often priced at the parallel market rate, meaning companies do not pass on the actual exchange rate to customers”
The argument for the introduction of SSB tax
Speaking on behalf of the National Action on Sugar Reduction (NASR), Comrade Bernard Enyia, who also serves as the vice president of the Diabetes Association of Nigeria, noted that the consumption of sugar-sweetened beverages (SSBs) is linked to various health issues, including obesity and dental problems.
Ms. Shirley Ewang, Advocacy Lead at Gatefield, Ewang emphasized that SSB taxes are significant due to their potential for revenue generation, which could be utilized for health programs.
She said, “Last year, Nigeria faced significant inflation and currency devaluation, trends that began well before the tax’s introduction. In our fact sheet, we addressed one of the key arguments from the industry about profit margins.”
“Interestingly, Coca-Cola’s 2023 profit report revealed that in emerging markets like Nigeria, their profits increased by over 50 per cent. This indicates that despite the tax, their profitability remained strong,”
Backstory
The federal government has implemented a sugary drinks tax to address the increasing levels of obesity and other diseases in the country.
This measure will also generate much-needed government funds after the financial impact of the COVID-19 pandemic.
The tax, signed into law as part of the 2021 Finance Act, adds 10 Naira (US$0.02) per litre to all non-alcoholic and sugar-sweetened beverages (SSBs).