MAN Group Decries Campaign to ‘Lynch’ Sugar by Subterfuge Body

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.”

December 12, 2022