• Saturday, December 02, 2023
businessday logo

BusinessDay

Sugar tax: Private sector rallies support for beverage industry

Sugar tax: Private sector rallies support for beverage industry

Stakeholders in the food and beverage industry have urged the Federal Government to disregard any campaign aimed at increasing the current sugar-sweetened (SSB) tax from N10 per litre to N30 per litre.

Segun Ajayi-Kadir, the director-general of the Manufacturers Association of Nigeria (MAN), said in a statement on Wednesday in Lagos that any move to increase the sugar tax would strain the already overwhelmed manufacturing sector.

Ajayi-Kadir noted that the current campaign led by the Corporate Accountability and Public Participation (CAPPA) Group was not in support of manufacturing growth, a critical engine of any country’s economy.

According to him, the manufacturing sector, particularly the food and beverage sub-sector, remains crucial to every economy in the world and the realities in Nigeria show its performance has grown in relevance and value.

He noted that over the years, many multinational companies had been forced to relocate their operations out of the country due to harsh and non-conducive operational environments that impeded the ease of doing business.

Ajayi-Kadir said the fear being raised by industry watchers was that Nigeria may once more witness a mass exodus of beverage industries for the nation’s business landscape if the Federal Government increase the SSB Tax.

Read also: Another Sugar Tax will slow down economic recovery

This, he said, was because excessive taxation would lead to reduced economic activity in the industry, with the ultimate effect of causing a decline in its contribution to the nation’s gross domestic product (GDP).

“The sectoral groups inclusive of MAN, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture and the Nigeria Economic Summit Group regrets that recently the food and beverage industry has grappled with excessive taxation.

“Data from the World Trade Organisation shows that the food and beverage sector is estimated to contribute 22.5 percent of the manufacturing industry value, generating an estimated 1.5 million jobs and 4.6 percent of the country’s GDP.

“The food and beverage sector encompassed a wide range of businesses, including restaurants, cafes, food producers, and beverage manufacturers.

“Beyond its economic value, this industry forms the very fabric of our daily lives, shaping our culture and social interactions.

“Hence, the recent call for an increase in sugar-sweetened beverage tax from N10 per litre to N30 per litre poses a potential threat to the operations of this most important sector of the Nigerian economy,” he said.

The director-general averred that a balanced approach to taxation, taking into consideration the unique challenges of this sector, was essential to ensure its continued growth and contribution to the nation’s GDP.

Read also: Nigerian food giant Flour Mills eyes self-sufficiency in sugar

He noted that striking the right balance between tax revenue generation and economic sustainability would be pivotal in preserving this vital economic pillar while fostering growth and innovation in the industry.

Ajayi-Kadir said the recent call for SSB Tax increase by CAPPA, hinging its argument on the claim that the consumption of sugary drinks is a known risk factor for ailments was deflated by health experts.

“Hence, the theory that increasing levies on sugar-sweetened beverages as the way out in mitigating communicable diseases like obesity and diabetes was unfounded.

“According to health experts, a balanced nutritional approach, which allows for the occasional indulgence in sugary beverages, can harmonise with a healthy lifestyle and dispel misconceptions about their influence on obesity and related health issues.

“Expert also stated that the surge in obesity cannot be solely attributed to sugar; inactive lifestyles, lack of physical activity, and overall poor dietary choices play a significant role in the obesity epidemic.

“This recent call has become worrisome in view of the fact that the industry has in recent time been burdened with excessive taxes and continuous imposition of taxes has its implications that may likely affect the country negatively,” he said.