Nigerian Senate Faces Backlash Over Proposed Soft Drink Tax Hike

The Nigerian Senate is facing widespread criticism over its plan to increase excise duties on non-alcoholic beverages. The proposal, put forward by Senator Ipalibo Harry Banigo through the Senate Committee on Finance, seeks to replace the current fixed N10 per liter tax with a percentage-based levy on retail prices. Revenue from the tax hike is intended to support the health sector.

Economists and industry advocates have condemned the move, warning it could worsen inflation, increase consumer prices, and threaten jobs. The Centre for the Promotion of Private Enterprise urged the Senate to abandon the plan, citing potential factory closures, layoffs, and rising costs for households.

Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers, echoed these concerns, saying Nigerians are already struggling under multiple taxes and economic hardships. He called for a suspension of any new tax increases, warning that “the government should not kill Nigerians with taxes all over the place.”

Economist Prof. Godwin Oyedokun said the proposed excise duty could severely impact low-income families and small businesses. He highlighted that higher prices would affect households, students, artisans, and families who rely on affordable beverages, while small retailers, restaurants, and vendors could see reduced sales and profits. The beverage industry, employing thousands across production and distribution, could also face job losses if sales drop.

Oyedokun questioned the likelihood of significant government revenue gains, noting that consumers may shift to cheaper alternatives or informal markets, reducing the tax’s effectiveness. He also warned that the proposal sends negative signals to investors, especially given that similar duties were suspended in 2023 following industry and labor concerns.

The economist called on the government to explore alternative fiscal strategies, such as expanding the tax base, improving administration, and supporting sectors that generate broad employment. He stressed that while revenue generation is important, the social and economic costs of the excise duty hike could outweigh the benefits, adding pressure to an already strained economy.