Finance minister lends support for sugary drinks tax

 

Mr Wale Edun, Minister of Finance and Coordinating Minister of the Economy, has supported the benefits of implementing a sugary drinks tax.

He said that its implementation would improve public health and generate additional revenue for the government.

Edun said this when the National Action on Sugar Reduction (NASR), a coalition of non-governmental organisations, paid him a visit on Wednesday in Abuja.

The minister admitted the presence of a sugar tax and highlighted the dual pressures on beverage companies, and the need to create jobs and reduce poverty and the negative health consequences of their products.

He said that while job creation by these companies was a positive outcome, the consumption of Sugar-Sweetened Beverages (SSBs) carries significant public health costs.

Edun said that the government’s tax revenue from SSBs must be balanced against industry needs, including pricing and the cost of living.

The Minister said that the government was considering a temporary suspension of the sugar tax under a six-month economic stabilisation plan.

“This measure aims to help beverage companies navigate the current economic difficulties without going under,” he said.

According to him, this is a delay, not a denial, saying that the suspension is intended as a temporary relief, with plans to reintroduce the tax once the economy stabilises.

He likened the arguments against the SSB tax to those made in the past against tobacco taxation, underscoring the importance of data-driven analysis in shaping public policy.

Edun encouraged the coalition and advocacy groups to continue providing incisive studies and robust data to strengthen the case for the sugar tax.

He said that while the government was not in favour of companies selling unhealthy products, it recognises the need to support businesses and help people cope with the current cost of living.

The minister also highlighted the role of the presidential Economic Coordination Council in this decision, acknowledging the necessity of government revenue but also the need to offer relief amid economic challenges.

“The temporary suspension of the sugar tax is seen as a measure to stabilise the economy and support the beverage industry during this critical period,” said.

He acknowledged that the Minister of Health and Social Welfare was making efforts to reduce the cost of drugs and pharmaceuticals.

“We support your need for revenue, but we must find a balance,” he stated.

“The increase in foreign exchange rates is being passed on to consumers.

“While the official exchange rate was artificially pegged, products are often priced at the parallel market rate, meaning companies do not pass on the actual exchange rate to customers,“`he said.

Speaking on behalf of the coalition, Comrade Bernard Enyia, co-chair of the NASR coalition, said that the costs of Insulin and diabetes care had doubled its cost in the country,” he said.

Enyia, who is also the vice president of the Diabetes Association of Nigeria, said that the consumption of SSBs is linked to various health issues, including obesity and dental problems.

“The public health costs associated with these conditions are significant, impacting healthcare systems and reducing overall productivity,” He stressed.

Ms Shirley Ewang, Advocacy Lead at Gatefield, presented a case for sugar-sweetened beverage taxes on behalf of the NASR coalition.

Ewang said that SSB taxes matter because of their revenue generation potential and the possibility of revenue being used for health programmes.

Said that when the beverage tax was introduced, even before its implementation, the beverage industry raised a public outcry, claiming it would hurt their profits.

However, she said it was important to consider the broader economic context.

“Last year, Nigeria faced significant inflation and currency devaluation, trends that began well before the tax’s introduction.

“In our fact sheet, we addressed one of the key arguments from the industry about profit margins.

“Interestingly, Coca-Cola’s 2023 profit report revealed that in emerging markets like Nigeria, their profits increased by over 50 per cent.

“This indicates that in spite of the tax, their profitability remained strong,” she said.

According to her, our plea is for the government to require these manufacturers to provide their revenue data.

She said that this transparency would help ensure that policy decisions were based on comprehensive data, reflecting both economic and public health impacts.

“While we must continue our research, it’s equally important for manufacturers to contribute their data.

“This will enable more informed and balanced decision-making that supports both the economy and public health, which should not be disregarded.

“We’re here today to emphasise on the importance of prioritising the health of Nigerians in policy considerations,” she said.

The federal Government adopts a sugary drinks tax to tackle rising levels of obesity and other diseases in the country.

The move will also generate much needed funds for the government following the financial hit of the covid-19 pandemic.

The tax was signed into law as part of the 2021 Finance Act. It adds 10 Naira (N) to each litre (US$0.02 /litre) of all non-alcoholic and Sugar-Sweetened Beverages (SSBs)