Nigeria is facing a heated debate over a proposed amendment to the Customs and Excise Tariff (Consolidation) Act (CETA), which seeks to impose a dramatic increase in excise duties on soft and sugary beverages (SSBs). The measure, sponsored by Senator Ipalibo Harry Banigo, would hike taxes from N10 per litre to N130 per litre, or approximately 20% of the retail price.

While supporters argue the tax is necessary to curb sugar consumption and fund health programmes, critics warn of dire economic consequences.

The SSB industry in Nigeria directly and indirectly employs over 1.5 million Nigerians, spanning factory workers, distributors, transporters, small-scale farmers, and the thousands of informal retailers—often women and youth—who sell drinks in neighbourhood kiosks and street stands.

A sudden 1,200% tax increase, opponents argue, could shrink demand, force companies to cut production, and trigger mass layoffs. The impact would ripple across the entire supply chain, affecting agriculture, logistics, and the informal sector, with entire communities at risk of economic destabilisation.

Private sector organisations like the Organised Private Sector of Nigeria (OPSN) and the Manufacturers Association of Nigeria (MAN) warned during recent Senate hearings that such a levy, amid already thin margins, could cripple the industry. Domestic sugar output, for instance, plummeted 35% in 2023 after previous tax pressures, demonstrating the real-world effects of overtaxing the sector.

Beyond jobs, the fiscal argument is complex. SSB companies contribute substantially to government revenue through corporate income tax, VAT, excise duties, and PAYE contributions. A sharp decline in sales could reduce these contributions, meaning the government risks losing more than it gains from the proposed excise hike.

Critics stress that Nigeria’s context differs from wealthier countries: the informal economy is vast, and social safety nets are weak. Policies that threaten millions of livelihoods without alternatives risk worsening poverty rather than improving health outcomes. There is also concern that consumers may shift to cheaper, unregulated alternatives, undermining both health and revenue goals.

Experts argue that public health objectives can be pursued without jeopardising 1.5 million jobs. Options include earmarking existing excise revenues for health infrastructure, improving tax compliance, promoting corporate transparency, and encouraging beverage companies to innovate healthier alternatives.

The CETA amendment proposal, in its current form, represents a high-stakes gamble: the potential short-term revenue gains and uncertain health benefits may be far outweighed by widespread job losses, erosion of the tax base, and a chilling effect on investment.

As the nation deliberates, the critical question remains: Can Nigeria address sugar consumption without endangering livelihoods? With 1.5 million Nigerians’ jobs hanging in the balance, the stakes could not be higher.