2022 will be a memorable one for many Nigerians even if they’re trying to forget. We saw the price of items double, our naira had a makeover, our national grid died and resurrected more than a few times, schoolchildren will now be taught in their native languages, and Meffy rolled out new cash withdrawal restrictions as a Christmas gift.
But to end the year with a bang, the federal government is proposing adding a 20% tax on non-alcoholic beverages.
What does this mean for Nigerians?
Because soft drinks make up the bulk of non-alcoholic beverages, if the 20% tax is implemented, there’d most likely be an increase in the prices of these drinks soon. However, this isn’t the first time the government is taxing the soft drinks industry.
What happened before?
Earlier this year, there was an increase in the prices of some drinks — a bottle of Coke sold formerly for ₦200 became ₦250. Unknown to many of us, this increase was because of the ₦10 per litre tax the federal government placed on Sugar-Sweetened Beverages (SSB).
What’s their reason?
Statistics show that nearly 40 million litres of soft drinks are sold annually in Nigeria, the fourth highest in the world. This puts many consumers at risk of diseases like stroke, heart disease and type 2 diabetes. So, the government imposed the ₦10 per litre tax to reduce our consumption of these beverages. The extra revenue from the tax is channelled towards treating sugar-related diseases.
What happens now?
Beyond the price hike, if the 20% tax is implemented, there are other possible side effects.
People will lose their jobs
Since the ₦10 per litre tax has been added, many beverage companies have found it challenging to make a profit. A study showed that there had been an 8% decrease in revenue between July and August this year, and this decline is expected to reach 25% by December.
If the 20% tax is further implemented, revenue figures could be further affected and would eventually lead to the loss of jobs.
We’ll scare off foreign investors
During a stakeholders’ meeting discussing the effects of the proposed government tax on December 6, 2022, it was noted that the tax discouraged one of the bottling companies from proceeding with its £300 million investment plan. And if the tax is finally implemented, we can expect more stories like this.
The government’s plan to help reduce the consumption of carbonated soft drinks isn’t bad. Still, they must try to strike a balance instead of frustrating manufacturers and increasing our already high cost of living.