Tax Debate: Much Higher Tax on SSBs Not Same as Effective Health Policy

 Proposes SSB tax based on beverage’s sugar content

Dike Onwuamaeze

As the National Assembly continues work on the Customs, Excise and Tariff Amendment (CETA) Bill in the Non-Alcoholic Drinks (NAD) sector, a report by ThinkBusiness Africa (TBA) has warned that “a much higher tax on sugar-sweetened beverages is not the same thing as an effective health policy.”

The TBA gave this warning in its report dated September 2026 and titled “CETA Bill: Will a Bigger Sugar Tax Improve Nigerians’ Health — or Simply Make Life More Expensive?”
The report stated that the CETA amendment would introduce an ad valorem tax that could potentially increase the effective tax burden on SSB products to N130 per litre from the current N10 per litre.

The TBA said that the “central issue is not whether Nigeria should care about excessive sugar consumption. It should.
“The question is: Will imposing a substantially higher tax on SSBs deliver meaningful improvements in obesity, diabetes and hypertension — and are those potential benefits sufficient to justify the economic and administrative costs?

“The evidence does not yet provide a sufficiently strong answer.

“What the evidence does show is that SSB taxation can reduce purchases of taxed beverages. But reducing purchases is not the same as reducing obesity, diabetes or hypertension.

“The longer-term health evidence is considerably less conclusive.”

According to the TBA, “the proposed tax, therefore, risks producing a familiar policy problem: A highly visible tax increase with uncertain health benefits and potentially significant economic costs.”
It asked: “If the policy objective is to reduce sugar consumption, why tax beverage value rather than sugar content?” because “the proposed ad valorem model primarily increases the price of beverages.
“It does not necessarily distinguish between beverages according to how much sugar they contain.”

It said that the five things policy makers and Nigerians should know about the CETA Bill is, firstly, that “the proposed tax is not simply an adjustment to the existing N10 levy,” which is “a specific tax of N10 per litre.
“The proposed amendment would move to an ad valorem system, meaning that taxation would be linked to the value of the product rather than simply the volume produced.

“Based on estimates cited in the policy debate, the effective burden could rise to approximately N130 per litre.
“That would represent a very substantial increase in the tax burden.
“It also changes the way the tax works” because it implies a greater administrative burden on SSBs’ manufacturers, and higher economic costs to the wider economy.

Secondly, TBA said that “the strongest evidence supports lower purchases, not necessarily better health since available international evidence shows that increases in SSB taxes lower purchases, but do not necessarily lead to better health outcomes.”

Thirdly, it said Nigeria’s economic reality matters because the CETA proposal is being considered at a time when Nigerian households and businesses are already under substantial pressure, especially from high inflation, rising production costs, foreign-exchange pressures, weaker household purchasing power, and widespread poverty.

Fourthly, the TBA highlighted that the industry is already under pressure, as analysis of Nigeria’s sugar market provides an important warning.

It said: “According to National Sugar Development Council data, total sugar consumption declined from approximately 1.72 million tonnes in 2022 to 1.44 million tonnes in 2023 — a fall of about 16 percent.

“Domestic sugar production also declined from approximately 46,479 tonnes to 30,053 tonnes, a fall of about 35 percent.”

Finally, the TBA said that before increasing the tax, Nigerians deserved to know what happened to the existing tax.

“Nigeria already has an SSB levy. It is N10 per litre. Before increasing that burden dramatically, there is a basic accountability question:

“How much has the existing levy generated, where has the money gone, and what measurable health outcomes has it produced?” it asked.

The TBA also raised key questions for policymakers, including the administrative challenges of determining the ad valorem tax.

It said: “Volume-based tax is relatively straightforward: litres produced × tax per litre = excise liability.
“But an ad valorem tax requires a determination of value even though beverage prices can differ according to location, product size, distribution channel, transportation costs, retailer margins and market conditions.

“This raises practical questions, including: which price is the tax based on, who determines it, how frequently is it updated, how are regional differences handled, how are disputes resolved, and how does the government prevent under-declaration or valuation disputes?

“The answers determine whether a tax system is predictable and enforceable.”