Manufacturers and industry stakeholders have expressed strong opposition to the recently proposed Customs and Excise Tariff (Amendment) Bill (CETA) 2025, cautioning that the legislation could further deteriorate the country's already challenging business environment and real sector if enacted into law.
This opposition emerges as the bill advances through the National Assembly, aiming to replace the current flat-rate excise duty on sugar-sweetened beverages (SSBs) with a percentage-based levy linked to retail prices.
Stakeholders argue that the proposed changes would increase production costs, discourage investment, and place additional strain on businesses already facing significant economic headwinds.
Current Tax Regime and Proposed Changes
Under the existing tax framework, manufacturers and importers of SSBs pay an excise duty of N10 per litre on products such as carbonated drinks, energy drinks, and other sweetened beverages. Lawmakers introduced this levy to discourage excessive sugar consumption and generate additional revenue for healthcare spending.
However, policymakers supporting the amendment contend that inflation has significantly eroded the real value of the tax over time, reducing both its effectiveness as a public health tool and its contribution to government revenue. To address this challenge, the proposed amendment seeks to replace the flat-rate levy with a percentage-based excise duty tied to the retail price of SSBs, with the exact structure to be determined by the Minister of Finance.
Stakeholders' Concerns
Stakeholders are strongly opposing this proposed legislation, noting that it comes at a particularly difficult time for manufacturers and employers. They warn that additional taxes could further strain businesses already dealing with high operating costs, foreign exchange volatility, inflation, and weak consumer purchasing power.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, criticised the proposal, highlighting that the association has repeatedly engaged policymakers over the impact of excise taxes on manufacturers. He explained that manufacturers have spent several years recovering from disruptions caused by the COVID-19 pandemic and continue to contend with rising production costs, making additional tax burdens impossible to absorb. According to him, the proposed legislation represents a setback to MAN's long-standing advocacy for a more supportive operating environment for manufacturers in Nigeria's food and beverage sector.
Similarly, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, expressed deep concern over the potential economic consequences of imposing additional taxes on an already challenged sector. While recognising the importance of promoting healthier lifestyles and reducing non-communicable diseases, she stated that public health interventions must be designed to achieve health outcomes without imposing disproportionate costs on businesses, consumers, and the overall economy.
She said: "At a time when manufacturers are grappling with high energy costs, elevated interest rates, logistics challenges, multiple taxation, and weak consumer purchasing power, the introduction of additional taxes risks further increasing production costs. These higher costs are likely to be passed on to consumers through higher prices, worsening inflationary pressures and reducing demand for locally manufactured products."
Dr. Almona further expressed concern that the tax could have unintended consequences across the industrial value chain, as the beverage industry supports a wide network of suppliers, distributors, transport operators, retailers, farmers, and service providers. Any decline in production volumes resulting from increased taxation may negatively affect these interconnected sectors, leading to reduced investments, lower capacity utilisation, and potential job losses.
Calls for a Balanced Approach
She noted that a more balanced approach is needed, combining public health education, voluntary industry reformulation initiatives, improved product labelling, consumer awareness campaigns, and broader stakeholder engagement. Such measures could help achieve health objectives while minimising adverse effects on industrial growth and employment. "We want to see manufacturers reformulate their products over a transition period rather than raise prices due to SSB taxes. A reformulation-focused tax may be more effective than a revenue-focused tax. Incentivising lower sugar content can achieve health objectives while preserving industrial activity. Policymakers must carefully assess impacts on agriculture, manufacturing, and supply chains before implementation, especially where industries support large numbers of jobs," she said.
Dr. Almona urged the Federal Government and the National Assembly to undertake a redesign exercise through more technical engagement with manufacturers, health experts, organised private-sector groups, consumer associations, and other stakeholders to create a policy that drives product reformulation while preserving sales and jobs.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, urged the government to focus on easing the cost of doing business and revitalising manufacturing, rather than imposing an additional layer of taxation on manufacturers, thereby worsening an already precarious sector. He noted that the bill is ill-timed, insensitive to prevailing economic realities, and inconsistent with the government's commitment to reducing the tax burden on businesses.
Dr. Yusuf observed that at a time when manufacturers are grappling with numerous challenges and businesses are shutting down, the imposition of an additional excise tax would further erode industrial competitiveness and weaken investment prospects. "Any additional tax burden on the industry would inevitably increase production costs, raise consumer prices, weaken demand, reduce capacity utilisation, and threaten jobs across the value chain. Now that the economy needs stronger industrial growth, this proposal risks becoming a tax on production, investment, and employment," he said.
