The majority of Nigerians have slammed the Federal Government’s decision to levy a 10 percent excise duty on soft drinks as “ill-timed, insensitive, and inappropriate,” among other debilitating adjectives.
Of course, they have a right to express their displeasure with such a law because of how it affects them.
“Foreign investors would leave, and the importation rate would plummet, resulting in massive job losses.” According to the LCCI- Lagos Chamber of Commerce and Industry, these are the direct consequences to be expected.
“The income benefits would have a ripple effect that would incapacitate and negatively impact the economy,” believes Isemede, a former NACCIMA D-G (the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture). Even the Nigerian Labour Congress has emphasized the rising cost of living in general for the country’s predominantly poor population.
But, with the long term in mind, can we approach this differently?
What if the benefits outweigh the drawbacks? I mean, considering the possibility that the Federal Government’s action in this case, at the very least, may not be as ‘insensitive’ as it has been portrayed, and may even be worthy of praise.
Different countries use their discretion in allocating excise duties when it is absolutely necessary. The Nigerian government is correct in calling for a sugar tax, especially since diabetes is becoming an epidemic.
Let us now look at the revenue. The health sector requires significant capital investment, and excise duty provides another source of revenue for Nigeria’s budget. Despite the fact that the Manufacturers Association of Nigeria commissioned a report detailing the effects of reintroducing excise duty on carbonated drinks and warned that it would be counterproductive and result in revenue loss for the government, these effects may only be short-term.
The decision on the sugar tax, like all roses with thorns, has its drawbacks. However, the big picture or a different point of view may be all that is required to accommodate this new change.
