Nigerians to pay more for carbonated drinks as FG considers introduction of sugar tax
The federal government, in its latest determination to increase the nation’s revenue streams, is considering the introduction of excise duties on carbonated drinks consumed in the country.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, made this disclosure on the sidelines of the ongoing annual meetings of the International Monetary Fund and the World Bank in Washington D.C., the United States.
She said government was working to maximise existing revenue streams while trying to identify new revenue streams, including the sugar tax, which would be charged on soft drinks.
According to her, “Our objective is to be able to harness the existing revenue streams that we have by ensuring that enforcement is effective to expand the tax base and also to identify new revenue streams that we can add to expand the revenue base.”
To expand its revenue base, Mrs Ahmed said further that, “We have proposed the increase of VAT but there are also other revenue streams that we are looking at and some of them include the introduction of excise duties on carbonated drinks but there is a process to doing these things.”
“Any tax that you are introducing will involve a lot of consultations and also amendments of some laws or introduction of new regulations.
“There are several cost-cutting measures also in the Strategic Revenue Growth Initiative (SRGI) and also a number of cost-cutting initiatives such as innovation and automation as well as capacity building of our people,” she stated.
She further added that the fact the country’s revenue was under-performing was not enough excuse to bring down revenue that is required to fund the national budget.
“The budget of countries is supposed to be based on taxes that the country is able to generate. It is an anomaly for us in Nigeria that our budgets have not been focusing on revenue,” she said.
“In 2018, our revenue performed at a level of 58 percent. Half-year 2019, our performance moved up slightly to 58 percent. But that is not an excuse to reduce revenue. Because it means we are all sanctioning under performance.”
Ahead of 2020, the minister said the country was looking at harnessing the full potential of revenue mobilization and also increase the nation’s tax to GDP ratio.
“The only increase in taxes in 2020 budget is just VAT. Everything else is just maximizing the potentials of existing tax streams that we have and we hope that we will be able to do this to be able to move our tax to GDP ratio from the current seven to eight percent of GDP to 15 percent,” she added.
Recall that excise is currently placed on alcoholic beverages, which has put the players in the sector in very difficult situation, resulting in poor performances at the market.
In the United Kingdom, government charges tax on sugar-sweetended beverages in an effort to reduce the health challenges associated with intake of soft drinks.