The Senate has approved a new excise duty framework for sugar-sweetened beverages, replacing the existing N10-per-litre levy with a retail price-based tax system and establishing a dedicated funding mechanism for public health initiatives.

The approval followed the adoption of the report on the Customs, Excise Tariff, etc. (Amendment) Bill, presented by Senator Sani Musa, chairman of the Senate Committee on Finance, on behalf of the joint committees on Finance and Customs, Excise and Tariff.

Under the new regime, the current fixed excise duty on sugar-sweetened beverages will be replaced by a levy calculated as a percentage of the product’s retail price, with the specific rate to be determined by the Minister of Finance.

Lawmakers also approved provisions requiring that a portion of the revenue generated from the levy be earmarked for health promotion campaigns, disease prevention programmes, primary healthcare services, and health insurance coverage for poor and vulnerable Nigerians.

Presenting the committee’s report, Senator Sani Musa said the current N10-per-litre excise duty had been eroded by inflation and was no longer effective in discouraging excessive consumption of sugar-sweetened beverages.

“The current excise duty of N10 per litre on sugar-sweetened beverages has been significantly eroded by inflation and is too low to effectively discourage excessive consumption or generate substantial revenue,” the committee said.

The Senate noted that Nigeria is experiencing a rising burden of non-communicable diseases, including diabetes, obesity, hypertension and cardiovascular diseases, many of which are associated with unhealthy dietary habits and excessive consumption of sugar-sweetened products.

The Senate also expressed concern over the persistent underfunding of Nigeria’s healthcare system and its heavy reliance on out-of-pocket spending, a situation that restricts access to essential health services and places significant financial pressure on many households.

According to the committee, health-related excise taxes can serve a dual purpose by promoting better public health outcomes and supporting government revenue generation. It noted that such taxes help reduce the consumption of unhealthy products while providing additional funds that can be invested in healthcare and other public services.

Lawmakers observed that the current volume-based excise tax system does not adequately account for the sugar content of beverages and provides limited incentives for manufacturers to reformulate products by reducing sugar levels.

The committee also noted that stakeholders who participated in the public hearing on the bill largely endorsed the proposed retail price-based levy, arguing that it would offer a more sustainable and effective taxation model than the existing flat-rate excise regime.

Organisations that made submissions during the public hearing included the Nigeria Tobacco Control Alliance, Action for Women and Girls Initiative, Corporate Accountability and Public Participation Africa, Health Sector Reform Coalition Nigeria, Christian Network for Nation Building, Centre for the Promotion of Private Enterprise, Nigeria Employers’ Consultative Association, National Health Insurance Authority, Nigeria Immigration Service, Presidential Fiscal and Tax Reform Committee, Nigeria Cancer Society, Diabetes Association of Nigeria, and the Civil Society Legislative Advocacy Centre.

The committee cited evidence from countries such as South Africa, Mexico, and the United Kingdom, where taxes on sugar-sweetened beverages have been linked to lower consumption levels and improved public health outcomes.

The committee also referenced recommendations from the World Health Organisation (WHO), which suggest that health-related taxes should raise retail prices by at least 20 percent in order to significantly influence consumer behaviour and encourage healthier choices.

The Senate further noted that data from the Nigeria Customs Service showed that the existing excise duty on sugar-sweetened beverages generated over N108.6 billion between 2022 and September 2025.

“The tax remains a viable source of government revenue and can be better leveraged to support public health priorities,” the committee observed.