Barely two weeks after the Sectoral Group of the Manufacturers Association of Nigeria raised a discomforting alarm over strong indications that the Federal Government is planning a proposed additional 20 per cent Ad-Valorem Excise Tax on the Carbonated Soft Drinks segment, the group
has once again decried the ongoing
emotional campaign to string up the sugar angle by a subterfuge group hurriedly
concocted and purportedly sponsored by the government.
It said a faceless body has been
masquerading and trying to use the sugar angle to rationalise an economic
virus.
It added that that the economic virus may
become a pandemic, which it intends to unleash on the non-alcoholic beverage
industry.
This is believed to be coming in reaction
to the multidimensional pressure that has been unleashed on the government by
the vehement opposition in response to the proposed regulation by the sectoral
group and concerned stakeholders over the last couple of weeks.
Spurred by the vociferous campaigns that
have been mounted on the issue, government lobbyists are coming up using an
emotional, but weak health angle to knock the public outcry, the MAN group
said.
The National Action on Sugar Reduction,
recently staged what it termed a peaceful march in Abuja, urging the government
to increase taxes on sugary drinks and invest the revenue into public health.
It said soft drink taxes are a ‘win’ for
Nigerians, adding that the consumption of sugary drinks is known to be a risk
factor for diseases like Type 2 diabetes, heart issues, stroke and cancers.
But the MAN Group queried the motive.
It said: “What one is quick to consider is:
Why this group?
“What is the interest of the group?
“It is such that it can be safely concluded
that the faceless group is simply the last straw that the government is holding
onto in its resolve to go ahead with the proposed primitive and retrogressive
economic approach whose greater consequence portends adverse social, political,
economic and even health implications for the entire system.”
The sectoral group stated that the ongoing
campaign to lynch sugar and use it as a poster boy or silver bullet to solve
Nigeria’s healthcare problems is, at best misleading.
According to the group: “Citizens’ health
is a significant responsibility of all governments, and any action to protect
citizens’ health is desirable and should be supported.
“But the false attribution of sugar-related
ailments to a single cause or product is wrong.”
The group further stated that the lobby
group that has encouraged the Federal Government of Nigeria to impose higher
taxes on sugar-sweetened beverages has used data that do not support their
argument for the increases in taxes on sweetened beverages.
It said: “Firstly, the group agrees that 70
per cent of citizens’ medical bills in the country are private expenses and do
not involve the government.
“The call for the government to raise taxes
to cover these private expenses is perplexing and inconsistent with best global
tax practices that place the burden or incidence of tax on a product to cover
the cost to the government of treatment of patients that consume the product.”
Corroborating this position, Teslim
Shitta-Bay, a foremost economic analyst, while countering the jaundiced and
misleading position put forward by the lobby group, said the advocates of the
so-called sugar tax have argued that in 2007, Nigerians consumed 9ml per
person, and in 2021 or 14 years after, they consumed 14ml per person, representing
a Compound Annual Growth Rate of 3.46 per cent, which is only slightly higher
than the national population growth rate over the period.
Nigerians consume 8kg of sugar per person
per annum, which is below the prescribed World Health Organisation’s
recommended 9.1kg per person and is significantly lower than the United
Kingdom’s 30kg or the United States of America’s 46kg per person.
Shitta-Bay also raised greater health
concerns of the aftermath of the sugar tax: “Yes, health issue can be connected
to economic development but in this case, there is no justification to use
health to rationalise simply because the Carbonated Soft Drinks sector has not
violated the regulations.”
He drew a similar parallel with the tobacco
sector case.
The sector also suffered a similar fate of
the imminent dangerous trajectory that the Carbonated Soft drinks is been
pulled towards, he argued.
The regulatory position was such that
advertising of tobacco was banned.
Meanwhile, the effects of that were that
smokers migrated to other unregulated substances and drugs, including tramadol.
Shitta-Bey said: “No doubt, this only made
a mess of the health justification been rationalised by the government as this
was inadvertently been promoted because users were forced to move from
regulated substances, which had become a part of their social life at that time
to other hard and unregulated drugs due to over regulation.
“Similarly, when the cost of carbonated
drinks goes higher in view of the reality of the additional Excise Tax, those
who consume these drinks will look for alternatives.
“These alternatives are such that the
government cannot control and access their distribution.
“For instance, the government cannot
control Zobo or Kunu.
“Kunu and Zobo have sugar contents that
have not been scientifically subjected to factory tests regarding their sugar
contents compared to carbonated soft drinks.
“Like it is often, it is always coming with
a multiplier effects.
“Another greater risk is that most of the
unregulated substances, for example zobo and kunu are sold at places where
government cannot access let alone control.
“For instance, the over regulation of
drinks like gin made it to come in small sachets but its major distribution and
sales is at motor parks where drivers indulge same making a mess of the ‘Don’t
drink and drive’ regulations that was put in place to curb over-indulgence in
alcohol and the concomitant effects of drivers coming under the influence of
the alcohol and placing their own lives and those of several commuters at risk.
“But that is where you find the greatest
concentration of gin and that is one of the effects of over regulation.
“Controlling sugar consumption is essential
but raising taxes is not the solution.
“The best way to control sugar consumption
is by setting and enforcing regulations around the amount of sugar used in
carbonated drinks.
“In addition, a social awareness programme
explaining the consequences of excessive sugar consumption should be made with
messages placed on non-alcoholic carbonated drink bottles, like the country’s
Chief Medical Officer’s warning on a cigarette pack.
“The FGN needs revenue, and rightly so.
“On a net position, government targets a
total of N81 billion in collection with the successful implementation of the
proposed additional 20 per cent Ad-Valorem Excise Tax, but the N10/per litre
tax on carbonated non-alcoholic drinks has already led to a 16 per cent fall in
industry revenue.”
Given that, Shitta-Bay affirmed that the
ugly scenario, which would be created, will affect the overall economic
productivity that government is trying to protect.
He averred that a PwC study showed that the
expected revenue government intends to generate from the proposed additional 20
per cent Ad-Valorem excise tax is about N81 billion, and a cursory look at the
reduction in Value Added Tax, Company Income Tax and Personal Income Tax, there
would be about N200 billion unclaimed tax being threatened, which is not good
for the economic recovery policy of an emerging market economy like Nigeria.
The meaning is that the government would
not meet its desired increased net revenue target from the sector in 2022/2023,
he said.
He added: “In essence, what this portends
for the system is such that a position known as the Cobra effect is forced on
the government such that its solution is worse than the original problem.”