Pretoria – Government's proposed 20 percent sugar tax will not come into effect from April this year as originally mooted.
Addressing Parliament on Wednesday on the occasion of his Budget speech, Finance Minister Pravin Gordhan said further consultations are currently taking place on the tax on sugary beverages.
He says, as a result of these talks, and input from the Department of Health, the proposed design has been revised to include both intrinsic and added sugars.
The tax will be implemented later this year once details are finalised and the legislation is passed.
SA's proposed tax on sugary drinks has not been tabled without some controversy. Economists have argued it will not succeed because it will not deter people from buying fizzy drinks, as has been the case in other countries.
In addition, companies in the sector have warned that it could cost thousands of jobs.
However, National Treasury’s Budget Review document, handed out on the occasion of the speech, says its preliminary socioeconomic impact assessment shows a relatively small effect on job losses, most of which can be prevented if companies reformulate their products.
“Over the past year, the National Treasury published a draft policy paper and consulted with industry associations and other interested parties on the tax.”
As a result, the design has been revised:
• A broader World Health Organisation definition will be applied to cover both intrinsic and added sugars in sugary beverages.
• The sugar content will remain the base on which the tax is applied because it is well suited to public health goals.
• The proposed tax rate will be 2.1c/gram for sugar content in excess of 4g/100ml.
• Of the proposed rate, 50 percent will apply to concentrated beverages.
Some of the revenue will be used to support health-promotion interventions as part of a strategy to fight non-communicable diseases, National Treasury says.
The tax, at 20 percent on all drinks with sugar, could raise R5 billion in revenue for government.