Majority of Nigerians have brandished the move by the Federal Government to place 10% excise duty on soft drinks as “ill-timed, insensitive, and inappropriate”, amongst other debilitating adjectives.
Of course, they are justified in expressing their displeasure at such a law because of how it impacts them.
“Foreign investors would leave, importation rate would plummet amidst massive job losses”. These are what to expect as direct implications according to the LCCI- Lagos Chamber of Commerce and Industry. “The income benefits would have a ripple effect that will incapacitate and impact the economy negatively”, this is what Isemede- former NACCIMA D-G (the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture) thinks. Even the Nigerian labour congress has hammered the increasing cost of living in general for the populace that is predominantly poor.
But can we approach this differently, with the long-term in mind?
What if the pros dwarf the cons? I mean, entertaining the possibility that perhaps the Federal Government’s action in this case at least, may not be as ‘insensitive’ as flaunted; and may even well be deserving of some encomiums.
Carefully consider these pros
Obesity and Diabetes- Nigerians do not grasp the real extent of how grave a threat diabetes poses.
It is an incurable condition with over 4 million Nigerians living with it according to World Health Organizations stats in 2019. Diabetics is caused by excess sugar consumption and Nigeria ranked 4th highest soft drink consuming country globally in 2016.
Now, you would agree that the burden of the sugar tax by the federal government was not insensitive at all to the plight of the lower-class but rather crucial. Many poor Nigerians can afford to buy a soda and bread but how many can afford diabetics treatment?
The sugar tax is necessary because it influences purchasing power indirectly. It causes any temporary satisfaction/value obtained from the soft drink consumption to pale in significance to its cost. This goes a long way in discouraging dismissive sugar intake.
Obesity on the other hand is concerning and has attracted more attention since the full emergence of the COVID-19. Epidemiological studies report that obesity is associated with a higher rate of mortality in patients with COVID-19. Frankly, 10% tax on carbonated drinks is a no-brainer if it succeeds in actually decreasing consumption mildly and in making the lives of citizens healthier.
Secondly, Public health groups, along with economists and doctors, have urged the government to increase excise duty on tobacco in India. This is worthy of mention because, we mustn’t subject ourselves to the harsh realities that come with a full-blown problem when it could have been hitherto averted, like with India and tobacco.
Different countries exercise their discretion in apportioning excise duties where it is absolutely justifiable. The Nigerian Government is not wrong to call for the sugar tax especially as diabetes is slowly becoming an epidemic.
Let’s now discuss the revenue. The health sector is in need of significant capital injection and the excise duty provides another source of contribution for Nigeria’s budget funding. Even though MAN- 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 lead to revenue loss for the government, these effects may just be in the short term. MAN projects that in the next 3 years the federal government would earn N81bn from this excise duty but lose N197bn, but who quantifies the number of lives saved or the improvement in the health status of citizens within the same period?
Admittedly, like all roses with thorns, the decision on the sugar tax has its cons. But the big picture or a differing perspective may be all we need to accommodate this new change.