FG Loses as Court Rules Against Imposing Tax on Coke, Pepsi, Other Carbonated Drinks
- A Federal High Court in Nigeria has halted the Nigerian government from implementing a N10 excise duty on soft and carbonated drinks
- Akinyemi Akinneye, a tax expert, disclosed that the Nigerian government will reintroduce the sugar tax despite the court ruling halting its implementation
- Public health expert, Oluwanifemi Akin-Obembe warned of a potential downside to the federal government's proposed sugar tax
A Federal High Court in Abuja has barred the Nigerian government from imposing excise duty on carbonated drinks, declaring the plan invalid.
The ruling comes amid a suit filed two years ago by the Nigeria Employers’ Consultative Association (NECA) after the government introduced an excise duty of N10 per litre of carbonated, non-alcoholic, and sweetened beverages.
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FG reveals the reason for imposing sugar tax
The sugar tax was reportedly meant to dissuade excessive consumption of sugar beverages, which they say leads to diabetes, obesity and other health challenges.
NECA challenged the circular, stressing that the duty was unjustifiable.
According to TheCable, the Minister of Finance, Wale Edun, and Atiku Bagudu, the Minister of Budget and National Planning, were named as part of the defendants in the suit.
NECA disclosed that Justice O.A. Egwuatu of the Abuja High Court rejected the Ministry of Finance’s preliminary injunction due to a lack of merit.
The association said that the substantive case is invalid and ultra-vires, according to the court, stating that the powers of the second defendant and first defendant are not entitled to demand transport and feeding allowances from NECA.
Adewale Smatt-Oyerinde, NECA’s director general, hailed the judgement as a victory for organised businesses in Nigeria against attempts to impose additional burdens on taxes.
FG considers temporary suspension of sugar tax
In July last year, the finance minister said the Nigerian government was considering suspending the temporary, the potential halt was under a six-month economic stabilisation plan.
Experts say the development will give manufacturers and businesses some breathing space as manufacturers reported that there was an increase in unsold goods last year.
According to the experts, the ruling, if upheld, will also leave some cash in consumers’ pockets as the country battles high inflation.
Expert reveals ruling won't deter future sugar taxes
The court ruling halting the implementation of a N10 excise duty on soft and carbonated drinks may not deter the government from introducing similar taxes in the future, according to Akinyemi Akinneye, a tax expert with the Lagos state Internal Revenue Service.
Akinneye told Legit.ng:
"Before the tax is implemented, there is always a bill and there are stakeholders that sit down to agree on it."
He believes that the government will find a way to implement similar taxes in the future, as they are aimed at reducing the consumption of sugary drinks and promoting public health.
His words:
"It's going to be a win-win situation. We don't just want to collect tax, we look at the detriment. It's going to be a symbiotic one, not just collecting money from people and not giving back to them.”
Public health expert's perspective on sugar tax
The proposed sugar tax in Nigeria has been a topic of debate among policymakers, stakeholders, and the general public. To gain a deeper understanding of the issue, Legit.ng spoke with Oluwanifemi Akin-Obembe, a public health research analyst.
According to Akin-Obembe, if the sugar tax were implemented, it would have been an effective way to make people opt for healthier alternatives like water.
She said:
“Most Nigerians are price-conscious, and an increase in price would affect their purchasing behaviour. It's about N500 for a bottle, and now if taxed, it means that there is going to be an increase in the price. Most people will feel like, 'What's the point? Why am I going to buy a bottle of this drink at this very expensive price, when I can just drink water that is N200?'"
Akin-Obembe cited examples of countries like Mexico and South Africa, where the implementation of a sugar tax led to a reduction in consumption.
However, she also noted that one potential downside of the tax, if implemented, is that people may opt for smaller, but equally sugary, alternatives.
As she put it:
"You know, they do smaller sizes of these sugary drinks now. The other downside that can come up is that people may say, 'Instead of buying this one at a very expensive price, why don't I buy this smaller one?' In reality, it is the same. I have found that the smaller ones are even more sugary than the bigger size, which can still increase sugar consumption."
Akin-Obembe recommended alternative strategies to reduce sugar consumption now that the implementation has been suspended.
Advising policymakers, she said:
"Let there be educational awareness on the risks associated with consuming too much sugar. Let people know they are at risk of diabetes and obesity. Policymakers should also start promoting healthy dietary choices from a young age. They should target older individuals as well, letting them know that, as elderly persons, they should not consume too much sugar at their age. Furthermore, they should subsidise healthy alternatives. I had a conversation with my friend, and she said, 'Healthy living is expensive,' which is not a lie. You want to buy fruits and vegetables, and you know the prices in the market. Therefore, there should be a subsidy for healthy alternatives.”
FG moves to increase tax on Coke, Pepsi, others
Legit.ng earlier reported that the Federal Ministry of Health has committed to raising tax on sugar and other sweetened beverages from 10% to 20%.
The move is to fight the increasing public health concerns associated with excessive sugar consumption.
The move aims to encourage healthy beverage choices, reduce the intake of sugars and soft drinks, and contribute contribute to a healthier future for Nigerians.
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Source: Legit.ng
