NIGERIA – Nigeria’s Corporate Accountability and Public Participation Africa (CAPPA) has come under scrutiny as ThinkBusiness Africa, an economic analysis and policy advocacy group, questioned the feasibility and implications of CAPPA’s proposal to significantly raise taxes on Sugar Sweetened Beverages (SSBs) in the country.
In a recent report titled “ThinkBusiness Africa Insight Series April 2024: CAPPA, Sugar Sweetened Beverages (SSBs) Tax and Fiscal Policy in Nigeria,” the group challenges CAPPA’s call for a 927 percent increase in SSB tax, from N10 to N130 per litre.
The report questions the effectiveness of such a drastic tax hike in achieving the desired health objectives, suggesting it may burden the food & beverage sector without delivering the intended outcomes.
Dr. Ogho Okiti, CEO of ThinkBusiness Africa, emphasizes that CAPPA’s proposal is based on correlation rather than causation, cautioning against implementing tax policies without robust evidence of their effectiveness.
He highlighted the disproportionate impact such tax increases would have on government revenue, with SSB taxes potentially funding over half of the federal health budget.
Moreover, Okiti raised concerns about the quality of data used in CAPPA’s calculations, warning against hasty fiscal policy decisions that could undermine economic stability and investment in Nigeria’s non-alcoholic beverage sector.
He contended that Nigeria’s sugar consumption is below WHO recommendations, arguing against further taxation on an already heavily taxed industry.
“While WHO recommends a per capita consumption of 9.1kg, Nigeria’s consumption is currently at 8.3kg,” he said.
The report also criticized the timing of proposed tax changes, given the ongoing work of the Presidential Committee on Fiscal Policy and Tax Reforms.
“The work of the committee is expected to be completed later this year streamlining all forms of taxation and expected to be comprehensive. The suggestion in the CAPPA report negates the principle setting up this important committee. The first Finance Act was introduced in 2019. Subsequent Finance Acts have accompanied the appropriation Acts,” he said.
He advocated for fewer changes to the Finance Bill to allow for comprehensive analysis of their impact on demand, investment, and job creation.
The non-alcoholic beverage sector in Nigeria, valued at US$41 billion in 2023, plays a pivotal role in the country’s economy, contributing to growth and providing employment opportunities.
According to a report by PWC, the industry is already stretched in terms of taxation, contributing 45 percent of its gross profit as taxation that includes existing SSB tax.
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