A wave of sharp criticism has greeted the Nigerian Senate’s move to hike excise duty on non-alcoholic drinks, as both economists and citizens strongly oppose the plan.
The uproar stems from the Senate Committee on Finance’s effort to alter the current Sugar-Sweetened Beverage (SSB) tax—now a flat N10 per liter under Section 21(3) of the Customs and Excise Tariffs (Consolidation) Act—into a percentage-based charge tied to the retail price. The amendment bill, sponsored by Senator Ipalibo Harry Banigo, seeks to direct the additional revenue generated toward the health sector.
However, the proposal from Senate has sparked significant resistance from many Nigerians and industry experts alike.
The Centre for the Promotion of Private Enterprise had on Monday urged the Senate to discontinue the plan to increase excise duty on non-alcoholic beverages on the ground that it would lead to the shutdown of factories, a fresh hike in prices, and massive layoffs.
Similarly, in an interview on Monday, Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers and a university don, Prof. Godwin Oyedokun, like CPPE, condemned the move to increase excise duty on non-alcoholic beverages.
FG should not kill Nigerians with taxes — Unegbu
On his part, Unegbu lamented that Nigerians are already battling with multiple taxation and hardship.
He said that any plan to increase tax should be suspended by the Nigerian government.
“They should not kill Nigerians with taxes all over the place. They should be able to be reasonable in terms of their proposals.
“So for now, I will recommend that the government should not increase any tax for now,” he said.
Excise duty hike will deepen hardship – Prof. Oyedokun
Economist and public finance expert, Prof. Godwin Oyedokun has cautioned the Federal Government against the proposed plan from Senate, warning that the move could worsen inflation, cripple small businesses, and undermine already fragile household incomes.
In a statement issued on Tuesday, Oyedokun said the proposal from Senate has triggered widespread concern because it targets products consumed daily by millions of Nigerians—including soft drinks, flavored beverages, energy drinks, and other low-cost bottled drinks that often serve as alternatives for families struggling with rising food prices.
He noted that the economic implications of the proposed tax from Senate are far-reaching and risk outweighing the government’s expected revenue gains.
According to him, the first impact from Senate request would be an immediate rise in retail prices, as manufacturers typically transfer additional tax burdens to consumers.
“Households already battling high inflation will feel the squeeze, especially low-income earners, students, artisans, and families with children,” Oyedokun said.
He warned that small businesses—including roadside retailers, restaurants, event vendors, and neighborhood shops—would be among the worst hit, as higher prices could reduce demand and weaken daily earnings.
“For many micro and small traders, beverage sales are a key part of their cash flow. A drop in consumption could push some out of business,” he added.
The economist further expressed concern about potential job losses in the beverage value chain, which employs thousands of workers from factories to distribution networks.
Reduced sales, he said, could force manufacturers to cut production volumes and labor costs.
Oyedokun also questioned the premise that the tax hike would significantly boost government revenue.
He argued that consumers often respond to price increases by shifting to cheaper options, reducing consumption, or patronizing informal and unregulated markets—all of which could undermine projected fiscal gains.
He described the timing of the proposal as “misaligned with current economic realities,” noting that Nigerians are already grappling with record inflation, high transport costs, rising energy bills, and shrinking purchasing power.
“At a time when households need relief, another consumption tax feels counterproductive,” he said.
The economist also highlighted concerns over policy inconsistency, recalling that the Federal Government suspended similar excise duties in 2023 following warnings from manufacturers and labor groups.
A fresh attempt, he said, sends negative signals to investors who rely on stable policies to plan production and capital investments.
Oyedokun urged the government to consider alternative fiscal measures, such as expanding the tax net, improving tax administration, reducing leakages, and supporting sectors that generate large-scale employment.
“In summary, while the goal of increasing revenue is understandable, the social and economic costs of this excise duty hike appear far heavier than the benefits.
“Consumers, SMEs, and workers need breathing space in an economy already stretched thin,” he said.
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