CPPE Warns of Job Losses, Inflation as Govt Proposes Higher Tax on Soft Drinks
- The CPPE has warned that raising excise duty on non-alcoholic beverages will worsen inflation and lead to losses of jobs, urging the government to consult stakeholders and adopt broader strategies instead
- A Director at the CPPE said manufacturers and SMEs are already under severe pressure due to high costs, FX volatility and weak consumer spending
- The organisation argued that the proposed tax increase could reduce production and tax revenue, while adding to economic and social strain
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Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, tech and macroeconomic trends in Nigeria.
The Centre for the Promotion of Private Enterprise (CPPE) has cautioned against the proposed increase in excise duty on non-alcoholic beverages, saying the move could undermine Nigeria’s fragile economic recovery.
In a statement, the CPPE Director, Dr Muda Yusuf, said the proposal comes at a difficult time for manufacturers, SMEs, distributors and retailers who are already dealing with high inflation, rising production costs, unstable foreign exchange, high energy prices and weak consumer demand.
He noted that the manufacturing sector, which is one of Nigeria’s largest employers, is already under significant strain, and an additional tax burden could worsen its challenges. According to Yusuf, beverage prices have already surged by 200–300% in recent years due to inflation and earlier tax adjustments, leaving many producers, especially SMEs, struggling to stay in business.
Source: Getty Images
He warned that increasing excise duty now could reduce production, erode consumers’ purchasing power, trigger job losses and force some companies to shut down. He added that Nigeria cannot afford further factory closures or layoffs while the economy is still recovering.
The CPPE Director also highlighted broader economic and social implications. Yusuf said any tax hike on beverages would translate to higher market prices for consumers already battling rising costs of food, transport and essential goods, thereby adding more pressure on inflation.
The Director argued that the beverage value chain supports thousands of jobs across manufacturing, logistics, trading and the informal sector, hence a contraction could worsen unemployment.
On government revenue expectations, he argued that the policy is counterproductive, as reduced output and weaker sales could lead to lower, rather than higher, tax collection.
Yusuf also raised concerns about the policy process, noting that excise administration falls under the Federal Ministry of Finance. He said the current initiative appears to be driven largely by the Senate Committee on Finance and the Ministry of Health, with limited engagement of relevant committees or industry stakeholders, a development that may undermine policy consistency and investor confidence.
Sugar is consumed in bread, milk, other products
While acknowledging public health concerns related to sugar intake, the CPPE stated that focusing the tax hike solely on non-alcoholic beverages is not equitable. Yusuf said sugar consumption in Nigeria cuts across many products, including bread, pastries, milk-based drinks and carbohydrate staples.
He recommended a more comprehensive strategy that prioritises nutrition education, clearer food labelling, lifestyle awareness and voluntary industry-led sugar reduction programmes, noting that behavioural change is more effective than punitive taxes.
Following consultations with industry players and policy experts, the CPPE called for the proposed excise increase to be withdrawn. The organisation advised that excise rate-setting should remain an administrative function for flexibility and urged the government to focus on broader public health interventions.
Source: Getty Images
It also encouraged increased collaboration between the government and manufacturers on low-sugar and zero-sugar options, as well as responsible advertising and consumer awareness initiatives.
Yusuf stressed that the manufacturing sector needs stable and supportive policies, not additional tax pressures that could harm jobs, investment and long-term competitiveness. He urged the Senate Committee on Finance, the Presidency and the Ministry of Finance to review the proposal and ensure alignment across fiscal policies.
Manufacturers warn of job losses
Legit.ng earlier reported that manufacturers rejected the proposed tax hike on sugary drinks, arguing that it would lead to job losses in the sector.
The Manufacturers Association of Nigeria (MAN) made the argument at a public hearing on the matter organised by the Senate Committees on Finance and Customs.
In the same vein, the association rejected the federal government’s ban on alcoholic beverages in sachets and PET bottles, saying it would lead to massive loss of jobs. The government’s decision is premised on public health promotion.
Source: Legit.ng
