Senate Overhauls Sugar Tax, Targets N108.6bn Health Fund As Nigerians Battle Diabetes, Obesity Surge

The Senate on Wednesday approved a sweeping reform of Nigeria’s excise duty framework on sugar-sweetened beverages (SSBs).

The Red Chamber replaced the existing N10-per-litre flat-rate tax with a percentage-based levy and directed that part of the revenue be channeled into health financing programmes targeting the country’s rising burden of non-communicable diseases.

In simple terms, the Senate has changed how Nigeria taxes sugary drinks like soft drinks and other sweetened beverages.

Before now, the government charged a fixed tax of N10 on every litre of these drinks, no matter the price.

Now that has been replaced with a percentage-based tax, meaning that instead of paying a fixed amount, manufacturers will pay tax based on the price or value of the drink. So, if a drink is more expensive, the tax on it will also be higher.

The decision followed the consideration and adoption of the report of the Joint Committee on Finance and Customs, Excise and Tariff on the Customs, Excise Tariff (etc) Amendment Bill, presented by the Chairman of the Senate Committee on Finance, Senator Sani Musa.

Lawmakers said the reform was designed to correct the erosion of the current tax value by inflation, strengthen fiscal sustainability, and align Nigeria’s tax system with global public health and revenue best practices.

Under the new arrangement, the fixed N10 per litre excise duty has been scrapped.

In its place, the Minister of Finance will determine a percentage-based levy on non-alcoholic, carbonated and sugar-sweetened beverages, benchmarked against global standards and prevailing economic conditions.

The Senate also mandated that a portion of the revenue generated from the revised tax be dedicated to health interventions, including disease prevention, health promotion, primary healthcare strengthening, and support for health insurance coverage for vulnerable Nigerians.

Lawmakers warned that Nigeria was facing a rapidly escalating epidemic of non-communicable diseases such as diabetes, obesity, hypertension and cardiovascular conditions, largely driven by high sugar consumption and unhealthy dietary patterns.

They further observed that the country’s healthcare system remained heavily underfunded and dependent on out-of-pocket payments, exposing millions of households to catastrophic health spending and limiting access to essential services.

According to the Senate, the current volume-based excise system does not reflect actual sugar content in beverages, thereby reducing incentives for manufacturers to reformulate products with lower sugar levels.

The chamber argued that health-related excise taxes serve a dual purpose: discouraging excessive consumption of harmful products while generating sustainable revenue for public health investment.

Data presented during consideration of the report showed that the Nigeria Customs Service generated over N108.6 billion from excise duties on sugar-sweetened beverages between 2022 and September 2025, underscoring the sector’s strong revenue potential despite the low flat-rate structure.

The Joint Committee noted that several stakeholders, including public health advocates, civil society organisations and fiscal policy experts, supported a shift to a percentage-based levy, describing it as more resilient, equitable and responsive to inflationary pressures.

Among the organisations engaged in the public hearing were health and governance groups such as the Nigeria Tobacco Control Alliance, Corporate Accountability and Public Participation Africa, Health Sector Reform Coalition Nigeria, the Civil Society Legislative Advocacy Centre, the Diabetes Association of Nigeria, and the Nigeria Cancer Society, alongside employers’ groups and fiscal policy stakeholders.

While some industry representatives raised concerns about potential increases in production costs and possible job losses, lawmakers insisted that the broader public health gains outweighed short-term economic adjustments.

The Senate also cited international experience from countries such as South Africa, Mexico and the United Kingdom, where similar sugar taxes have successfully reduced consumption of sugary drinks and improved health outcomes.

It further referenced guidance from the World Health Organisation (WHO), which recommends that health-related taxes should increase retail prices by at least 20 per cent in order to significantly influence consumer behaviour and reduce consumption.

To ensure effective implementation, the Senate directed the Minister of Finance to set an appropriate percentage levy aligned with global best practices and Nigeria’s fiscal realities.

It also urged the federal government to strengthen enforcement mechanisms within the tax system, improve stakeholder engagement, and complement the fiscal reform with public health campaigns, improved nutrition labelling, and stricter regulation of marketing targeted at children and vulnerable groups.

The lawmakers stressed that Nigeria must begin to treat health taxes not merely as revenue instruments, but as strategic policy tools for reducing long-term healthcare costs and improving national productivity.

They added that aligning excise policy with public health priorities would help reduce the growing burden of non-communicable diseases, which now account for a significant share of morbidity and mortality in the country.

In its conclusion, the Joint Committee commended the leadership of the Senate and members of the committee, as well as legislative staff, for the timely completion of the report, describing the reform as a critical step toward a healthier and fiscally stronger Nigeria.

Sunday Aborisade

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