Private Sector warns new Excise Bill could undermine Tinubu’s Fiscal Reforms

The Organised Private Sector of Nigeria (OPS) has urged the National Assembly to withdraw the proposed amendment to the Customs, Excise and Tariff Bill, warning that the draft legislation is inconsistent with President Bola Tinubu’s fiscal reform agenda and could destabilise key sectors of the economy.

Represented by NACCIMA, MAN, NECA, NASME and NASSI, the OPS presented its position at a public hearing on Thursday, 27 November 2025, shortly after the bill passed its second reading.

The group argued that the proposed amendments contain substantial economic, legal and administrative flaws that risk derailing ongoing reforms under the Presidential Fiscal Policy and Tax Reform initiative.

According to the OPS, Nigeria’s excise regime has become increasingly fragmented, with new levies introduced without a coordinated assessment of their cumulative effects on production, investment, exports, backward integration, employment, and inflation.

It warned that the current bill, if passed, could negate the administration’s economic stabilisation efforts without delivering meaningful public health improvements.

While reaffirming its commitment to supporting government revenue and health objectives, the OPS maintained that excise policies must be holistic, harmonised and context-appropriate, ensuring that they do not undermine industrial growth, affordability or investment.

The group noted that the proposed amendment introduces “mathematical, legal and administrative contradictions”, including the controversial clause prescribing a “20% levy per litre of retail price”, which it described as unworkable and inconsistent with global best practice.

It cautioned that an aggressive or poorly designed levy could impose significant costs on businesses and consumers, reducing capacity utilisation, increasing prices, and deepening poverty at a time when households and small enterprises are already struggling.

Industry players also warned that the bill could weaken the beverage value chain—a major non-oil revenue contributor and one of Nigeria’s largest employers.

Higher taxes, they argued, would raise production costs and shrink margins, potentially reducing VAT and CIT collections and placing further pressure on medium-term FAAC revenues.

“The non-alcoholic drinks sector is a critical economic stabiliser, supporting 1.5 million jobs, driving backward integration under NSMP II, and contributing 40–45% of gross revenues as taxes, yet it already operates under severe macroeconomic strain,” the OPS noted.

The group further criticised the National Assembly for progressing the bill without proper alignment with the Ministry of Finance, the Presidential Fiscal Policy & Tax Reform Committee, FAAC, and other key institutions.

It stressed that the bill contradicts the President’s priorities of stability, predictability, simplicity, and non-disruptive tax reform.

Citing global and domestic evidence, the OPS argued that steep or ambiguous Sugar-Sweetened Beverage (SSB) taxes in low-income economies often produce job losses, MSME contraction, reduced government revenue, and no clear public health gains, while accelerating the shift to informal markets and widening inequality.

The group added that excessive taxation risks shrinking Nigeria’s formal sector, reducing VAT and CIT collections, weakening state revenues, and undermining the administration’s ease of doing business agenda.

The OPS said it remains open to further engagement with lawmakers, fiscal authorities, and civil society stakeholders to ensure that any changes to the excise framework support investment, job creation, and long-term revenue stability.