Excise Hike on Soft Drinks will Fuel Inflation, Cost Jobs, CPPE Warns

The Centre for the Promotion of Private Enterprise (CPPE) has criticised the proposal by the Senate Committee on Finance to amend the Customs and Excise Act in order to increase excise duty on non-alcoholic beverages, describing it as economically harmful and procedurally flawed.

Dr Muda Yusuf, chief executive of CPPE, said the move would inflict further strain on households and businesses already battling severe economic headwinds.

“This proposal will worsen inflation, erode purchasing power and put thousands of jobs at risk at a time when the economy is still struggling to recover,” he said.

CPPE noted that the manufacturing sector, one of Nigeria’s largest employers, is at a critical juncture.

Over the past three years, producers of non-alcoholic beverages have faced significant cost pressures, including multiple tax adjustments, soaring operating costs, and steep inflation.

Prices of beverages have already risen by between 200 and 300 percent, leaving manufacturers and SMEs struggling to stay afloat as sales decline and margins tighten.

The organisation warned that imposing a fresh excise increase under these conditions would further weaken production capacity, reduce output, and risk triggering a new wave of factory closures and layoffs.

It also argued that the expected revenue gains from the proposed amendment were unrealistic, noting that many countries that adopted steep excise hikes later recorded revenue shortfalls due to declining consumption.

CPPE also raised concerns about what it described as procedural irregularities surrounding the proposal.

It questioned why a fiscal policy matter traditionally under the purview of the Minister of Finance appears to be driven by the Senate Committee on Finance in conjunction with the Minister of Health, with limited evidence of inter-ministerial consultation or economic impact assessment.

Excluding key committees such as Industry, Customs, and Trade and Investment, it said, undermines policy coherence and risks sending negative signals to investors.

On public health grounds, the centre said that targeting only non-alcoholic beverages for higher taxation presents a narrow and inequitable approach to tackling sugar related health risks. Sugar consumption in Nigeria, it noted, comes from a wide range of products including pastries, confectionery, milk-based drinks, baby foods and carbohydrate heavy staples.

It maintained that evidence from other countries shows that nutrition education, improved food labelling and lifestyle awareness campaigns deliver more sustainable health outcomes than punitive tax measures.

CPPE called for the withdrawal of the excise proposal, insisting that excise rate setting should remain an administrative function that allows government to respond flexibly to shifting economic conditions.

It urged the Federal Ministry of Health to work with manufacturers, civil society and nutrition experts on non-tax health interventions, and encouraged industry players to strengthen sugar reduction initiatives and responsible marketing practices.

Yusuf said Nigeria needs policies that support industrial stability and competitiveness rather than measures that could undermine recovery efforts. He urged government to adopt what he described as a collaborative, evidence based and economically sensitive approach that balances public health objectives with the need to safeguard jobs, investment and consumer welfare.