Experts Back FG's Stand On Taxing Sweetened Carbonated Drinks

*N10/litre tax will reduce burden of diseases, increase government revenue-ACUF

*I share the view that we should aim to broaden the tax net-Boniface Chizea

Industry experts and economists have backed the decision of the federal government to impose the N10 per litre tax on non-alcoholic sweetened beverages.

Just recently, Minister of Finance, budget and National Planning, Mrs Zainab Ahmed rationalized the expediency of this policy thrust by explaining that Nigerians who are addicted to such drinks often end up suffering from diabetes; are obese, relating to heart-related diseases.

She explained that this situation often takes its toll on the health budget of the country.

Contrary to popular opinion that the imposition of the additional tax burden is bound to worsen as it will undermine purchasing power, lead to a reduction in capacity utilisation and worsen the unemployment situation already unsustainably high at over 30 per cent, the Amaka Chiwuike-Uba Foundation (ACUF) commended President Muhammadu Buhari on the introduction of the N10 per litre excise duty on soft drinks, describing it as a welcome development and legislation that has been long-awaited.

The Board Chairman of ACUF, Dr Chiwuike Uba, in a statement made available to The Daily Times at the weekend, said the partial introduction of Sin Tax will not only lead to a drastic decline in the consumption of potentially harmful goods (especially Sugar-Sweetened Beverages (SSBs) but an increase in government revenue and improvements in the population health.

The statement reads: “We commend President Muhammed Buhari and the National Assembly for taking the bold decision to save the country from the costs associated with high consumption of such drinks in Nigeria.

“We are hopeful that the federal government will charge 100 per cent excise duties on sugar-sweetened beverages, tobacco, alcohol and other potentially health-threatening products in Nigeria.”

He added: “Available data shows that Nigeria currently suffers from a rising prevalence of diabetes mellitus (DM), with about 5.8% (about 6 million) of adult Nigerians living with diabetes mellitus. In addition, it is estimated that the number of people suffering from glucose tolerance deficits will increase from 9.41 million in 2021 to 11.98 million in 2030 and 18.79 million in 2045.

“Many children are currently living with type 2 diabetes in Nigeria, largely due to the high intake of sugar-sweetened beverages. Regular consumption of soft drinks has been established to cause abnormally high sugar consumption.

“As we mentioned earlier, the social and economic costs of disease associated with high consumption of soft drinks, alcohol, tobacco and other harmful substances are very high. No responsible government would just watch its people and its economic collapse over the easy consumption of these products.

“Related illnesses not only aggravate poverty and hunger in families but also reduce the overall level of national productivity. The amount accumulated in revenue for businesses and taxes for the government is not comparable to the economic and social costs to families and the government.”

“According to the International Diabetes Federation (IDF), treating diabetes per person has gone from an average cost of N60,000 in 2011 to N300,000 in 2021. This figure is also expected to exceed N500,000 in 2030 and N1.0 million in 2045, “ he said.

In the same vein, the financial burden of diabetic foot problems in terms of direct costs of treatment is above N2 million. The government must make every effort to deter the high consumption of these sugary and products harmful to health.

“According to IDF, diabetes-related healthcare expenditures in Nigeria in 2021 were about N745 billion. This will increase to more than N1.07 trillion by 2030 and N1.59 trillion by 2045. The average treatment cost for a cancer patient is N30 million. In the same vein, a recent study revealed that tobacco companies contribute less than N100 billion to Nigeria’s GDP, while N526.4 billion are spent annually to combat tobacco-related diseases. In addition, tobacco accounts for over 28,878 deaths per year in Nigeria.

“How much revenue does the country generate from manufacturers and distributors of these products concerning the associated economic, social and health costs on families and the government? Who even makes sure that the standards are met in producing these products? Reducing the incidence and prevalence of these diseases will improve the health of the population and hence overall economic activity, hence the need for the Sin Tax.”

Also reacting to this development, Dr Boniface Chizea, believes that the observation has not been made with any deep interrogation.

He further argued that “It should be common knowledge that sometimes there is the need to have the political will to take what on the surface might look like a hard decision. What is important is what the likely outcomes are.

“It is known to informed compatriots that this country is confronted with the fiscal challenge of lack of the generation of adequate revenue particularly tax for the size of our economy; the largest economy in the African continent. At a six per cent ratio of revenue/ GDP Nigeria compares very unfavourably with the average of over 16 per cent of fifteen African countries.

“I share the view that we should aim to broaden the tax net by bringing in those who should put have not been paying any tax. We should deliberately work to firmly plug the loophole of corruption that results in the diversion of such funds. And for effect we would have no choice but to leverage on technology,” he said.While expressing optimism, he stated that “We also learnt the Federal Inland Revenue Services is making giant strides with the record it has recently attained with the mobilization of revenue. Yes, we acknowledge that we have problems with our economy; no doubt but these successes is the building blocks that would eventually get us out of the woods of economic backwardness.”