SSB tax hike: MAN warns against higher soft drink taxes, says policy could cost 300,000 jobs

Stanley Ihedigbo

Manufacturers Association of Nigeria (MAN), speaking on behalf of the country’s Non-Alcoholic Drinks (NAD) sector, has called on the Federal Government to maintain a balanced, evidence-based and coordinated approach to excise taxation, warning that plans to significantly increase taxes on sugar-sweetened beverages (SSBs) could undermine industrial growth, job creation, investor confidence and economic stability.

In a statement issued in Lagos on Monday, MAN expressed concerns over provisions contained in the Customs and Excise Tariff etc. (Consolidation) Act Amendment (CETA) Bill 2025, which seeks to replace the current specific excise rate of N10 per litre with a percentage levy based on retail prices.

The association said while the industry remains committed to supporting government efforts to boost revenue generation and improve public health outcomes, fiscal policies must be predictable, data-driven and tailored to Nigeria’s economic realities to avoid unintended consequences.

According to MAN, the non-alcoholic drinks sector remains one of the strongest pillars of Nigeria’s manufacturing industry, accounting for about 33 per cent of manufacturing output and supporting more than 1.5 million direct and indirect jobs across production, agriculture, logistics, retail and micro, small and medium enterprises.

The association noted that despite challenging economic conditions characterized by inflation, foreign exchange scarcity and escalating energy costs, the sector continues to make significant contributions to government revenue.

It disclosed that tax remittances from the sector rose from N123 billion in 2022 to N127 billion in 2023, even as operators grappled with rising production costs and a difficult business environment.

MAN further stated that industry analysis shows companies currently remit between 40 and 45 per cent of their gross revenues in various taxes, placing the sector near the upper limit of sustainable taxation.

The association warned that many manufacturers have recorded losses over several financial years, with some paying taxes from capital rather than profits, a development it described as unsustainable.

Citing projections by PricewaterhouseCoopers (PwC), MAN said a further increase of between 10 and 20 per cent in excise duties could reduce the sector’s Gross Value Added from N14.3 trillion to N11.5 trillion by 2030, while employment levels could decline from approximately 1.5 million to 1.2 million jobs.

On public health concerns, the association acknowledged government efforts to address the growing burden of non-communicable diseases (NCDs) but argued that policy decisions should be based on local evidence and consumption realities.

According to MAN, Nigeria’s per capita sugar consumption remains relatively low at about 7.1 kilograms annually, which it said falls within the threshold recommended by the World Health Organisation (WHO).

The group also maintained that beverages account for only a small proportion of household sugar intake and calorie consumption, adding that there is no conclusive empirical evidence identifying sugar-sweetened beverages as the primary cause of non-communicable diseases in Nigeria.

The association stressed that factors such as genetics, lifestyle choices, environmental influences and broader dietary habits play significant roles in the development of such diseases.

MAN further raised concerns over what it described as growing fragmentation within Nigeria’s fiscal policy environment, warning that overlapping taxes and levies could create uncertainty for businesses and investors.

It argued that the proposed CETA Bill risks undermining the Fiscal Policy Measures (FPM) 2026-2028 framework recently introduced to provide policy stability and predictability.

According to the association, conflicting fiscal instruments could weaken investor confidence, distort business planning and reduce the effectiveness of key industrial policies, including the Nigeria First Policy and the Nigeria Sugar Master Plan II.

The manufacturers also highlighted legal and administrative challenges associated with the proposed tax structure, particularly the move to base excise calculations on retail prices rather than the current ex-factory or ex-warehouse valuation system.

They warned that the proposed model could complicate enforcement, increase compliance costs and create inefficiencies for both regulators and manufacturers.

MAN noted that excise taxes do not operate in isolation but have implications across an interconnected value chain involving farmers, distributors, transporters, retailers and consumers.

It warned that higher taxes could suppress demand, reduce production volumes and trigger lower agricultural off-take, especially in the sugarcane value chain promoted under the Nigeria Sugar Master Plan.

The association added that small retailers and informal traders who dominate last-mile distribution networks would be particularly vulnerable to declining sales and shrinking profit margins.

Consumers, especially low-income households already struggling with high food costs, could also face reduced affordability and may resort to cheaper, unregulated alternatives, thereby creating additional public health concerns.

Drawing lessons from international experience, MAN cited examples from Mexico, South Africa and Finland, where similar taxation policies reportedly resulted in job losses, business closures and administrative challenges without delivering the expected health benefits.

The association therefore urged the Federal Government, through the Ministry of Finance, to engage the National Assembly to halt the proposed CETA Bill and ensure coherence in fiscal policymaking.

It also called for the protection of the Fiscal Policy Measures framework, stronger executive coordination of excise policies, broader stakeholder consultations and the development of a post-2028 excise roadmap that balances public health goals with industrial growth and employment protection.

Director General of MAN, Segun Ajayi-Kadir, said the association remains committed to partnering with the government in advancing Nigeria’s economic transformation agenda.

He emphasized that sustainable progress would require coherent and evidence-based policies that reflect the country’s macroeconomic realities.

According to him, Nigeria does not have to choose between public health objectives and economic stability, stressing that both can be achieved through collaboration, sound data, policy consistency and a long-term development strategy.