Sweet surprise for Treasury as sugar tax puts more than expected in the pot
By Tamar Kahn - Oct 31st 2018, 09:05
The Treasury has generated more money than it anticipated from its new tax on sugary drinks, despite moves by some manufacturers to reformulate products to reduce their sugar content.
The government introduced a tax on sugar-sweetened beverages on April 1, as part of its efforts to combat obesity and its related health risks. The Treasury calls it the health promotion levy, and it has been set at 2.1c for every gram of sugar per 100ml above a 4g threshold: in other words, the first 4g of sugar per 100ml are exempt from the levy.
The Treasury said it had collected a little more than R1bn in revenue from the sugar tax between April 1 and the end of August, slightly ahead of its projections. It had anticipated collecting R1.64bn during the entire 2018-2019 fiscal year, which ends on March 31.
The Treasury’s chief director for economics and tax analysis, Christopher Axelson, said there could be several explanations for the higher-than-expected revenue. “Either the surveys we used to make the calculations underestimated the consumption of sugary beverages or producers have not reformulated as much as we thought, or consumers have not decreased their consumption of sugary beverages as much as we estimated,” he said.
The Healthy Living Alliance’s executive director, Sibongile Nkosi, said researchers at Wits were currently evaluating the levy. “We are seeing a lot of re-formulation and new sizes, but we are not sure if industry is absorbing the tax or putting up prices,” she said.
The Beverage Association of SA (BevSA), said it was too soon to gauge the effect of the levy and that it planned to commission a study to determine its effects.
“BevSA has also run an education campaign to encourage healthy consumption of beverages, proper nutrition and exercise as part of a healthy lifestyle with the aim of reducing obesity and noncommunicable diseases in SA,” said BevSA’s GM for corporate services, Mpho Thothela.Business Live
SA expected to sow fewer maize hectares than in previous seasons
26/11/2019 - 10:06
South African farmers are expected to sow 2.8% fewer hectares of the food staple maize next season than forecast in October after the planting season was delayed by rains, a Reuters survey of analysts showed.
The clever shift SA's economy can make: economist
13/11/2019 - 13:29
Finance minister Tito Mboweni’s medium-term budget gave a blunt presentation of the financial issues facing South Africa and it is clear that government has finally come to grips with reality, says Efficient Group economist Francois Stofberg.
Billions in investments flow in to improve SA's economy
13/11/2019 - 11:30
More businesses have pledged billions of rands in investment to the ailing South African economy at the second investment conference in Sandton.
Black Friday hype begins as retailers test shoppers with 'teasers'
06/11/2019 - 09:15
Retailers’ gloves are off in the battle to gain market share ahead of Black Friday, with several deals already being unveiled to attract customers.
Manufacturing sentiment improved in October
05/11/2019 - 12:52
Manufacturing activity recovered in October, improving on the previous month’s revised figures and beating market expectations.