A Tax Too Far:  Fiscal Folly of Raising Nigeria’s Sugar-sweetened Beverage

Joseph Ajah

In a country grappling with inflation, job losses, and a fragile manufacturing base, the call by Corporate Accountability and Public Participation Africa (CAPPA) to raise Nigeria’s sugar-sweetened beverage (SSB) tax from N10 to an eye-watering N130 per litre is not only alarming—it is fiscally reckless.

CAPPA’s proposal, featured in its latest report, claims such a drastic tax hike will deter consumption and combat rising cases of non-communicable diseases like obesity and diabetes. But beneath the well-intentioned rhetoric lies a serious problem: there’s no credible data, no measurable outcomes from the current policy, and no transparency on what’s been done with revenues since the SSB tax was first introduced in 2022.

In fact, the Nigerian government has yet to release any figures on how much has been collected from the existing N10/litre tax—or how those funds have supported public health interventions. Without such basic accountability, how can we justify increasing the rate by 1200 percent?

Moreover, Nigeria’s beverage sector is already under significant pressure. Companies pay a staggering 45 percent effective tax burden, factoring in corporate income tax, VAT, and the recently increased tertiary education tax. Small and medium enterprises, which form the backbone of this sector, are especially vulnerable. A twelvefold tax increase could lead to plant closures, job losses, and reduced economic output—ultimately shrinking the taxable base and defeating the very goal of revenue generation.

And let’s not forget the human cost. Raising prices by this magnitude during a cost-of-living crisis disproportionately hurts low-income Nigerians, who already struggle to afford basic goods. With no guaranteed health outcomes, the tax risks being seen as a regressive levy rather than a tool for wellness.

This is not to say fiscal tools can’t be used for public health—they can. But they must be rooted in evidence and transparency, not ideology. Before introducing more taxes, the government should release data on revenue collection, conduct independent studies on the impact of the current tax, and explore targeted, community-based health initiatives that do not sacrifice jobs or consumer purchasing power.

The calls by CAPPA to increase Nigeria’s SSB tax from N10 to N130 per litre represents not a measured public health response, but a reckless fiscal gamble with wide-ranging economic consequences.

As I try to conclude, CAPPA’s proposed 1200 percent increase in excise duty lacks grounding in data, transparency, and basic fiscal prudence.  Additionally, the report cherry-picks global evidence. It fails to mention that the World Health Organization has twice declined to label SSB taxes as “Best Buys” in public health policy, due to insufficient evidence on cost-effectiveness. It also overlooks critical economic variables, such as the fragmented structure of Nigeria’s beverage market and the impact on small and medium enterprises (SMEs), which are already grappling with high taxation and inflation.

The least expected by the Nigerian public is some level of transparency that involves a disclosure of how much revenue has been generated or how these funds have been used to improve public health. In the absence of this data, any suggestion of raising the tax twelvefold is fiscally irresponsible. It would be akin to raising toll rates without knowing if the roads were even maintained with previous funds.

The policy also has serious implications for low-income consumers, who will feel the brunt of rising beverage prices amid a deepening cost-of-living crisis. Without a clear and transparent plan to earmark and utilise SSB tax revenue for public health programs, this policy risks being seen as nothing more than a regressive revenue tool—one that punishes consumers while doing little to improve national well-being.

Fiscal policies, especially those involving consumption taxes, must be data-driven, incremental, and integrated into a broader strategy. CAPPA’s proposed tax hike fails on all counts. Instead of such radical increases, what Nigeria needs is transparency on revenue, investment in regulatory enforcement, and an integrated public health approach that balances.