Beverage manufacturers to get temporary suspension

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has disclosed that the Federal Government is considering a temporary suspension of the N10 tax on Sweetened Sugar Beverages (SSBs) as part of its economic stabilisation plan.

The minister who made the disclosure yesterday, when he met with members of the National Action on Sugar Reduction (NASR) stated that the suspension is intended as a temporary relief, with plans to reintroduce the tax once the economy stabilises.

Edu compared the arguments against the SSB tax to those made in the past against tobacco taxation, highlighting the importance of data-driven analysis in shaping public policy. He stated that while the government does not support companies selling unhealthy products, it recognises the need to support businesses and help people cope with the current cost of living.

He also emphasised the role of the Presidential Economic Coordination Council in this decision, acknowledging the necessity of government revenue and the need to offer relief amid economic challenges.

According to him, “this measure aims to help beverage companies navigate the current economic difficulties without going under. The temporary suspension of the sugar tax is seen as a measure to stabilise the economy and support the beverage industry during this critical period.

“We support your need for revenue but we must find a balance. The increase in foreign exchange rates is being passed on to consumers. While the official exchange rate was artificially pegged, products are often priced at the parallel market rate, meaning companies do not pass on the actual exchange rate to customers.”

Speaking on behalf of NASR, Mr. Bernard Enyia, who also serves as the vice president of the Diabetes Association of Nigeria, noted that the consumption of SSBs is linked to various health issues, including obesity and dental problems.

Advocacy Lead at Gatefield, Ms. Shirley Ewang, stated that SSB taxes are significant due to their potential for revenue generation, which could be utilised for health programmes.

She said, “last year, Nigeria faced significant inflation and currency devaluation, trends that began well before the tax’s introduction. In our fact sheet, we addressed one of the key arguments from the industry about profit margins.

“Interestingly, Coca-Cola’s 2023 profit report revealed that in emerging markets like Nigeria, their profits increased by over 50 per cent. This indicates that despite the tax, their profitability remained strong.”

The Federal Government has implemented a sugary drinks tax to address the increasing levels of obesity and other diseases in the country.

This measure will also generate much-needed government funds after the financial impact of the COVID-19 pandemic.

The tax, signed into law as part of the 2021 Finance Act, adds N10 per litre to all non-alcoholic and sugar-sweetened beverages (SSBs).