A proposed increase in excise duty on non-alcoholic beverages in Nigeria has sparked widespread criticism from economists and citizens alike. The Senate Committee on Finance is pushing to amend the existing tax, which currently stands at a fixed N10 duty per liter, to a percentage-based levy on the retail price. The amendment bill, sponsored by Senator Ipalibo Harry Banigo, aims to channel the increased revenue into the health sector.

However, experts have raised concerns that the move could lead to factory shutdowns, price hikes, and massive layoffs. The Centre for the Promotion of Private Enterprise has urged the Senate to discontinue the plan, citing the potential negative impact on the economy. Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers, has also condemned the proposal, stating that Nigerians are already struggling with multiple taxation and hardship.

Economist and public finance expert, Prof. Godwin Oyedokun, has warned that the proposed tax hike could worsen inflation, cripple small businesses, and undermine household incomes. He notes that the economic implications of the proposed tax are far-reaching and risk outweighing the government’s expected revenue gains. The tax could lead to an immediate rise in retail prices, affecting low-income earners, students, and families with children.

Small businesses, including roadside retailers and neighborhood shops, would also be severely impacted, as higher prices could reduce demand and weaken daily earnings. The economist has also expressed concerns about potential job losses in the beverage value chain, which employs thousands of workers. Furthermore, Oyedukun questions the premise that the tax hike would significantly boost government revenue, arguing that consumers may respond to price increases by shifting to cheaper options or reducing consumption.

The timing of the proposal has also been criticized, with Oyedukun noting that Nigerians are already grappling with record inflation, high transport costs, and shrinking purchasing power. The economist has urged the government to consider alternative fiscal measures, such as expanding the tax net, improving tax administration, and supporting sectors that generate large-scale employment. As the debate continues, it remains to be seen whether the government will heed the warnings of experts and reconsider the proposed tax hike.