The Centre for the Study of Economies of Africa (CSEA), a leading research think-tank with primary focus on developments in Sub-Sahara African economies, has advised the Federal Government to ensure that tax revenue on carbonated drinks provided for in the 2022 Appropriation Act is deployed to the nation’s healthcare system in order to improve the quality of services in the sector.
The CSEA economic experts gave this recommendation in the Centre’s latest Nigeria Economic Issue Update No 1 sourced by our correspondent in Abuja.
Researchers in the Centre noted that the Finance Act 2021, enacted by the Federal Government, which sought to boost the revenue position of the government, is a collection of amendments to relevant tax, excise, and duty statutes in accordance with the macroeconomic policy reforms of the government.
According to the CSEA’s experts, among many provisions of the Finance Act, the N10 Excise Duty Tax per litre of carbonated drinks, is aimed at making all non-alcoholic and sweetened or sugary beverages more expensive and, thus, discouraging their excessive consumption.
They stated that the introduction of the tax was expected to reduce the associated health challenges like diabetes and obesity on the one hand and increase government revenues (for health-related and critical spending) on the other hand.
On the utilization of the tax collections, the experts advised: “The additional revenue arising from the introduction of the N10 tax per litre should be mainly channelled towards strengthening the health care system and increasing health care infrastructure in the country.
“Furthermore, a fraction of the fund should be spent on advocating for healthy nutrition and lifestyle, which is expected to improve citizens’ living standards and reduce the demand for health care services”, CSEA analysts added.
It would be recalled that the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, had while giving a breakdown of the highlights of the 2022 Appropriation Act in Abuja on January 5, 2022, maintained that government had introduced sugar tax on non-alcoholic beverages to discourage excessive consumption of sugar in beverages.
Ahmed explained that the sum of N10 per litre had been imposed on sweetened beverages as part of critical policy thrusts of the Finance Act 2021.
She explained: “In section 17 of the Finance Act, there is a law that has imposed a duty on non-alcoholic carbonated sweetened beverages. There is an excise duty of N10 per litre imposed on all non-alcoholic carbonated and sweetened beverages and this is designed to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.
“This new sugar tax is introduced to raise excise duties and revenues for health-related issues and other critical expenditures. It is in line with the 2022 budget priorities”, the minister stressed.
Before now, the minister had in 2019 hinted that the government may introduce excise duty on carbonated drinks to discourage excessive consumption of sugar beverages which contributes to diabetes and obesity, among other diseases.
