Sugar Tax Controversy: Budget Speech 2017

Finance Minister Pravin Gordhan gave an update on the status of one of South Africa’s most controversial new taxes – the proposed “sugar” tax in his 2017 Budget speech. The National Department of Health (NDoH) believes that “taxes are an excellent mediator of consumer behavior”. Some of the revenue from the tax will be used to support health-promotion interventions as part of a strategy to fight non-communicable diseases caused by poor diet, according to Treasury.

Herewith an article by BusinessTech with more detail in this regard:

Finance Minister Pravin Gordhan has delivered his 2017 budget speech introducing a host of new tax and finance adjustments for 2017.

While the majority of the budget focused on the implementation of transformation within South Africa’s economy and a renewed focus on growth, Gordhan also gave an update on the status of one of South Africa’s most controversial new taxes – the proposed “sugar” tax.

According to Gordhan, further consultations were taking place on the tax on sugary beverages and the proposed design was being revised to include both intrinsic and added sugars.

“Further consultations are currently taking place on the tax on sugary beverages. Arising from these discussions, and working closely with the Department of Health, the proposed design has been revised to include both intrinsic and addeds,” said Gordhan.

The tax will be implemented later this year once details are finalised and the legislation is passed.The proposed carbon tax and its date of implementation will be considered further in Parliament this year.

“The tax will be implemented later this year once details are finalised and the legislation is passed,” Gordhan concluded.

Original proposals

Government originally proposed 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 more taxed more.

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

Changes

According to Gordhan the new tax will now look at both intrinsic and added sugars when calculating the tax.

According to a report by BusinessDay, Treasury deputy director-general Ismail Momoniat told journalists that Treasury had also proposed a new threshold that would make the first 4g of sugar per 100ml beverage exempt from the sugar tax.

He also noted that 100% fruit juices and milk products would still be considered exempt from the tax.

Full credit for the above article goes to BusinessTech and their team of staff writers.