CPPE rejects proposed sugar tax, warns of job losses

The Centre for the Promotion of Private Enterprise (CPPE) has rejected proposals for additional taxes on sugar-sweetened beverages, as canvassed by the Corporate Accountability and Public Participation Africa (CAPPA), warning that the move could trigger job losses, discourage investment, and further strain Nigeria’s fragile manufacturing sector.

Muda Yusuf, chief executive officer of CPPE, called the proposal ill-conceived, poorly timed, and inconsistent with the current administration’s tax reform agenda, which is anchored on reducing the burden of taxation on businesses, improving tax efficiency, and stimulating investment.

Yusuf said that at a time when beverage manufacturers are grappling with surging fuel costs, weak demand, and shrinking margins, additional taxation would undermine business sustainability, threaten jobs across the value chain, discourage investment, and further weaken consumer welfare.

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He highlighted challenges manufacturers face, including high lending rates of 30 percent, rising energy costs, and the prohibitive cost of self-generation amid weak grid electricity supply.

“Within this context, the manufacturing sector, including the food and beverage industry, has come under intense strain, being one of the most energy-dependent sub-sectors in manufacturing.

“The combined burden of soaring energy bills and extremely high distribution costs has significantly worsened the operating environment for beverage manufacturers, further weakening the justification for any additional tax on the sector,” Yusuf said.

He also said that additional taxation at this time would accelerate downscaling of production due to unsustainable operating costs, closure of vulnerable small and medium beverage manufacturers, and job losses across production, distribution, and retail segments, and disruptions to agricultural supply chains linked to beverage production and increased informalisation of the sector as firms struggle to survive.

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Yusuf added that while CPPE acknowledges the rising incidence of non-communicable diseases such as diabetes, it is important to emphasise that taxation of sugar-sweetened beverages is not a silver bullet for addressing these concerns.

“Broader lifestyle factors, including dietary habits across multiple food categories, physical inactivity, and overall consumption patterns, primarily influence public health outcomes.

“Singling out a highly energy-stressed industrial segment for punitive taxation is therefore neither equitable nor effective,” Yusuf said.

CPPE further called for a more sustainable approach, urging the federal government to reject the proposal, the National Assembly to discontinue any legislative consideration of such a tax, and public health authorities to prioritise education, prevention, and lifestyle interventions.

“At this critical stage of Nigeria’s economic recovery, the policy imperative should be to support businesses, protect jobs, and strengthen growth, not impose additional tax burdens on an already strained sector,” Yusuf said.