Tax on sugary beverages to be implemented on legal nod

Cape Town – Government proposes to implement a tax on sugary beverages as soon as the necessary legislation is approved by Parliament and signed by the president, according to the Budget Review.

By the end of this year, government also expects to provide clarity on the alignment of the carbon tax and carbon budget after 2020.

The tax on sugary beverages will be administered through the Customs and Excise Act (1964). National Treasury’s 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. Following this process, the design of the tax 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 2.1cents per gram for sugar content in excess of 4g/100ml.

- Of the proposed rate, 50% 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.

During 2016, following comments received on the draft Carbon Tax Bill, government held additional public consultations. A revised Carbon Tax Bill will be published for public consultation and tabled in Parliament by mid-2017, according to the review.

The latest developments include the following:

- During the first phase of the tax (until 2020), there will be no impact on the price of electricity.

- A revised regulation for the carbon offset allowance, enabling firms to reduce their carbon tax liability, will be published by mid-2017. 

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