Sugar tax likely to be implemented in April 2018

SOUTH AFRICA – The proposed tax on sugary drinks is likely to be introduced in April 2018, Treasury deputy director general Ismail Momoniat announced in Parliament on Tuesday.

However, there is still disagreement on the exact level of tax, with businesses wanting a revised tax every three years, while Treasury wants to implement its current proposal of approximately 10% on a soft drink can, and increase this over time, reports BusinessDay.

The tax was first propositioned in former finance minister Pravin Gordhan’s 2016 budget speech, with government proposing that these drinks be taxed at a rate of 2.29 cents per gram of sugar, with the idea that drinks with large amounts of added sugar will be taxed more.

Drinks, which contain natural sugars – like unsweetened milk and 100% fruit juice – would not be taxed, while sugar-sweetened drinks where the sugar content is not disclosed on the packaging would be taxed at a fixed sugar level of 50 grams per 330 ml.

The proposal was later reportedly changed to look at both intrinsic and added sugars when calculating the tax. Treasury had also proposed a new threshold that would make the first 4g of sugar per 100ml beverage exempt from the sugar tax.

Fears of job losses

Momoniat said the problems facing the sugar industry pre-existed the introduction of the health promotion levy, with ANC MP Derek Hanekom adding that the levy proposal might act as a welcome catalyst to tackle these problems.

However, businesses and unions say that they are still concerned about the effect of the new tax on jobs in the sector.

“This has been one of the most extensive public consultations on a bill,” said Cosatu’s Matthew Parks to News24.

“We don’t want to collapse government’s health. Not a single Cosatu member does not have a family with diabetes, cancer and so on. But we are talking of unemployment of 36% to 38%. We are concerned with job losses.”

September 6, 2017: Business Tech

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