Court Strikes Down Sugar Tax on Carbonated Drinks in Landmark Ruling
In a major legal victory for businesses, a Federal High Court in Abuja has declared the excise duty on carbonated drinks imposed by the federal government invalid, marking a significant setback for the controversial “sugar tax.”
The ruling follows a lawsuit filed in 2022 by the Nigeria Employers’ Consultative Association (NECA), which opposed the N10-per-litre tax on nonalcoholic, carbonated, and sweetened beverages. The tax, introduced as part of the government’s strategy to curb sugar-related health issues such as diabetes and obesity, faced strong resistance from industry stakeholders.
NECA, representing business interests, challenged the levy, arguing that it was unjustified and an undue financial burden on companies. The legal battle named Wale Edun, Minister of Finance, and Atiku Bagudu, Minister of Budget and National Planning, as key defendants.
After three years of litigation, Justice O.A. Egwuatu ruled in favour of NECA, rejecting the preliminary objections raised by the Ministry of Finance due to lack of merit. The court further declared that the government’s circular authorizing the tax—titled “Approval for the Implementation of 2022 Fiscal Policy Measures and Tariff Amendments”—was beyond the legal powers of the ministry and, therefore, invalid.
Hailing the judgment as a crucial win for the business community, NECA’s Director-General, Adewale Smatt-Oyerinde, described it as a stand against “official arbitrariness and unfortunate attempts to impose additional burdens on businesses.”
Meanwhile, Finance Minister Wale Edun recently announced that the federal government is considering a temporary suspension of the sugar tax under a six-month economic stabilization plan. This move suggests that policymakers may be rethinking the controversial levy in light of its legal and economic implications.
