Soft drink prices set to rise as senate endorses new sugar tax regime

Nigerians may soon face higher prices for soft drinks, energy drinks and other sugar-sweetened beverages following the Senate’s approval of a new excise duty framework tied to retail prices.

The decision was taken during plenary on Wednesday as lawmakers adopted the report on the Customs, Excise Tariff, etc. (Amendment) Bill.

The new policy replaces the current flat-rate excise duty of ₦10 per litre with a percentage-based levy, the exact rate of which will be determined by the Minister of Finance.

Presenting the report, Chairman of the Senate Committee on Finance, Senator Sani Musa, said inflation had significantly reduced the effectiveness of the existing tax regime, making it less impactful on consumer behaviour and government revenue.

READ ALSO: Nigeria at 65: Reforms paying off, toughest phase over, Tinubu declares

The Senate said the reform is aimed at reducing excessive sugar consumption and addressing the rising burden of non-communicable diseases such as diabetes, obesity, hypertension and cardiovascular diseases.

Lawmakers also approved a dedicated funding mechanism to support public health programmes.

Nigeria consumes an estimated 38.6 million litres of soft drinks daily and about 1.8 million metric tonnes of sugar annually, making it one of Africa’s largest sugar markets.

While public health advocates have welcomed the move, the Centre for the Promotion of Private Enterprise (CPPE) and industry stakeholders have warned that higher taxes could increase production costs, fuel inflation and reduce consumer spending.

If fully implemented, the new tax regime is expected to boost government revenue and support healthcare funding, but consumers are likely to experience higher beverage prices as manufacturers adjust to the revised excise structure.