CPPE Opposes Senate Proposal To Raise Excise Duty On Soft Drinks

The Centre for the Promotion of Private Enterprise (CPPE) has raised strong objections to the Senate Committee on Finance’s proposal to amend the Customs and Excise Act to increase excise duty on non-alcoholic beverages, warning that the move would worsen inflation, threaten jobs, and impose additional burdens on struggling small businesses.

In a statement issued on Monday, CPPE Chief Executive Officer, Dr. Muda Yusuf, said the proposal comes at a time when manufacturers, distributors, retailers, and SMEs in the beverage value chain are battling severe macroeconomic headwinds marked by spiralling inflation, high operating costs, volatile foreign exchange conditions, and weakened consumer demand.

Yusuf cautioned that further tax increases on soft drinks would be economically disruptive and counterproductive to Nigeria’s fragile recovery efforts.

He noted that the non-alcoholic beverage industry has endured multiple shocks in recent years, including previous excise adjustments and soaring input costs, which have pushed product prices up by as much as 200 to 300 per cent.

Many operators, particularly SMEs, are already struggling to stay afloat, and any additional tax burden is likely to shrink production, suppress consumer demand, and trigger unnecessary job losses across the manufacturing and retail ecosystem.

CPPE warned that beyond the industry, the proposed excise hike carries wider economic and social consequences.

It stressed that higher taxes on beverages would lead to immediate retail price increases, worsening the cost-of-living crisis for millions of households.

The organisation also cautioned that the government’s revenue expectations may be misplaced, arguing that higher excise rates could depress consumption and ultimately result in revenue shortfalls, as seen in other jurisdictions.

The private sector advocacy group also raised concerns over the procedural process behind the proposal, pointing out gaps in inter-ministerial coordination.

It questioned why the initiative appears to be driven by the Senate Committee on Finance and the Minister of Health when excise rate-setting traditionally falls under the remit of the Minister of Finance and Coordinating Minister of the Economy.

According to CPPE, key Senate Committees on Industry, Customs, and Trade & Investment were not adequately engaged, and there is no evidence of stakeholder consultations or economic impact assessments to support the move.

Such procedural lapses, it said, could undermine policy credibility and investor confidence at a time when Nigeria needs stability to attract investment.

Addressing the public health justification for the proposed tax hike, CPPE stated that focusing solely on soft drinks is an ineffective approach to reducing sugar consumption.

It argued that Nigerians consume sugar through a wide range of products including pastries, bread, confectionery, milk beverages, and baby foods, and recommended evidence-based, holistic strategies such as improved nutrition education, clearer food labeling, physical activity campaigns, and voluntary industry-led sugar reduction programmes.

Yusuf emphasised that the proposed excise increase should be withdrawn in the interest of economic stability, job protection, and industrial competitiveness.

He maintained that excise policy rate-setting should remain an administrative function rather than be rigidly legislated into the Customs and Excise Act, noting that fiscal tools must remain flexible and responsive to prevailing macroeconomic realities.

The organisation called on the Senate Committee on Finance to reconsider the proposal, urging the Presidency and the Federal Ministry of Finance to reaffirm executive authority over excise policy to ensure coherence across fiscal policy domains.

It also encouraged the Ministry of Health to collaborate with manufacturers and nutrition experts on non-tax public health interventions, while urging industry operators to continue supporting responsible advertising and voluntary sugar reduction initiatives.

CPPE reiterated that Nigeria’s manufacturing sector remains at a critical juncture and requires supportive, predictable policies to sustain growth and employment.

It warned that the proposed excise hike threatens to reverse gains in the sector, undermine investor confidence, and impose additional hardship on consumers and SMEs already grappling with economic strain.