The Federal Government is considering raising excise duties on alcohol, tobacco, and other “sin goods” as part of broader tax and revenue reforms linked to a $750 million World Bank financing programme, according to the Bank’s latest implementation report.
The report notes that Nigeria’s current excise rates on sin goods are low, but steps are underway to review and increase them, with changes expected to take effect in 2026.
Currently, Nigeria operates a hybrid excise system, combining ad valorem rates and specific levies:
- Alcoholic beverages (beer, wine, spirits) attract a 20% ad valorem duty plus a per-litre charge.
- Cigarettes are taxed at 20% ad valorem plus a per-stick levy.
The Tariff Review Board has reportedly endorsed proposed increases for beer, stout, wines, whisky, and tobacco for the 2026–2028 period. The recommendations are expected to be submitted to the Minister of Finance for approval. Under the World Bank programme, a presidential order raising sin duties is a key reform milestone, though it is not yet due.
The move is part of Nigeria’s broader push to boost non-oil revenue, reduce dependence on oil income, and strengthen fiscal sustainability.
The World Bank report also highlighted:
- VAT collection as a share of non-oil GDP rose to 2.3% in December 2024, surpassing the 2027 target of 1.8%, driven by VAT withholding, taxpayer education, and removal of foreign exchange subsidies.
- Compliance with CIT and VAT filings dropped in percentage terms due to an expanding taxpayer base, though absolute filings increased significantly.
- Excise and environmental taxes are being expanded, including a 5% carbon levy on petroleum products and a planned green surcharge on vehicles.
Overall, the programme’s implementation was rated “moderately satisfactory,” with $109.9 million (14.7%) of the $750 million loan disbursed by January 2026. Several reforms have already been completed, including:
- Removal of tax exemptions on interest from corporate bonds
- Taxation of capital gains above ₦100 million
- Launch of FIRS e-invoicing and the Customs Authorised Economic Operator programme
Development economist Dr. Aliyu Ilias described the proposed excise hikes as pragmatic and expected, noting they could improve revenue and GDP contributions, but cautioned about growing reliance on externally driven directives.
Meanwhile, the Tariff Review Board, chaired by Minister Jumoke Oduwole, continues to coordinate trade, fiscal, and monetary policies to ensure a balanced, growth-driven, and credible tariff framework.
The proposed changes indicate that Nigerians may soon face higher prices for alcohol, tobacco, and other sin goods as the government works to modernise the tax system and strengthen public finances ahead of 2026 and beyond.