Does Nigeria need a sin tax?

Jan 26, 2022|Stephannie Adinde

A bottle of “Coke bigger boy” contains around 15-16 teaspoons of sugar. This exceeds the maximum daily sugar intake of roughly 12 teaspoons recommended by the World Health Organization (WHO) for an average adult with an average daily energy requirement of about 2,000 calories.

In 2019, Nigeria had the 7th highest soft drink consumption, with more than 49 servings of 8 ounces per capita annually. This comes as no surprise; Nigerians have a sweet tooth.

Some takeaways:

Sin taxes have proven useful policy tools in reducing the diseases typically associated with excessive sugar consumption, such as obesity and Type 2 diabetes.
Nigeria joined a host of countries fighting and introduced a 6.75% excise duty of ₦10 ($0.02) per litre on non-alcoholic sweetened beverages as part of the 2022 Budget Act.
Besides improving the health of Nigerians, the recently enacted soft drinks tax can prove beneficial in expanding the country’s weak tax base and boosting revenue generation.

Food pairings such as bread and coke are popular in Nigeria—particularly for the over one million construction industry workers across the country who spend most of their working hours in the prickly sun. While the cheap combination offers instant satiation, the real costs are concealed at the point of purchase and revealed much later in the form of health costs.

Sugar, particularly in liquid form from beverages, is a leading cause of several diseases, including obesity, diabetes, hypertension, cardiovascular disease and many common cancers. According to the WHO, people who regularly indulge in sugar-sweetened beverages (SSBs) have a 26% greater risk of developing type 2 diabetes than those who drink no more than one sugary drink monthly.

And it comes with a price tag. Research from the American Diabetes Association shows that individuals with diagnosed diabetes incur medical expenses 2.3 times higher than what expenditures would be in the absence of diabetes. Such individuals spend an average medical expense of $16,752 annually, of which about $9,601 is attributed to diabetes. Even so, these costs are not just to the direct consumers of SSBs; these products also impose costs on non-users, which economists refer to as negative externalities.

To grapple with the rising costs of sugar-related illnesses, governments worldwide have been flexing their fiscal policy muscle by enacting