The Federal Government’s recently imposed Excise Duty on non-alcoholic drinks will have a positive impact on the country’s revenue, Bismark Rewane, CEO of Financial Derivatives Company Limited, said.
“It however punishes the poor who are buying cheaper drinks,” Rewane said at the 2022 Economic Outlook event hosted by the Nigerian British Chamber of Commerce, Thursday.
The Federal Government introduced an Excise Duty of N10 per litre on all non-alcoholic, carbonated, and sweetened beverages.
The new policy, now referred to as ‘Sugar Tax,’ is contained in the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021.
Rewane also mentioned that the Federal Government could have taxed the people producing sugar instead of those consuming it.
Read also: Nigeria’s $1.4bn soft drink market to slow on Excise Tax
According to Zainab Ahmed, minister of finance, budget, and national planning, the Excise Duty on soft drinks would discourage excessive consumption of sugary beverages that contribute to diabetes, obesity, among others.
Africa’s biggest economy is home to over 12 million obese persons, according to a 2020 study published in the National Centre for Biotechnology Information, part of the United States National Library of Medicine, using data gathered from the World Health Organisation and the Nigerian health authorities.
She also added that it would help raise excise duties and revenues for health-related and other critical expenditures.
Nigeria’s rising public debt may not be the world’s highest but combined with its rising spending needs and the difficulty in raising extra tax revenue it faces a difficult fiscal policy trilemma.
Nigeria’s public debt rose to N38 trillion in the third quarter of 2021, according to data published by the Debt Management Office (DMO).
According to the IMF, Nigeria’s revenue to GDP is at 6.3 percent compared to South Africa (27.9%), Egypt (19%), Kenya (17.3%), and Ghana (12.3%).
