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South African consumers of sugar-sweetened drinks are set to feel the impact of the proposed sugar tax later this year as the relevant legislation is finalised for Parliamentary approval.
The National Treasury on Wednesday confirmed a proposed tax rate of 2.1c/g of sugar content in excess of 4 g/100 ml, with 50% of the taxes to be applied to concentrated beverages.
The proposed tax, which will be administered through the Customs and Excise Act (1964), has been revised to cover both intrinsic and added sugars in sugary beverages.
“The tax will be implemented later this year once details are finalised and the legislation is passed,” Finance Minister Pravin Gordhan said during the presentation of his 2017 Budget on Wednesday.
A portion of the revenue generated will be allocated to the support of health-promotion interventions, as part of South Africa’s ambitions of fighting obesity and noncommunicable diseases, with strategies including diabetes screening and nutritional education.
Despite the public backlash over the expected negative impacts of applying further taxes in an already strained economy, the National Treasury said its preliminary socioeconomic-impact assessment showed a relatively small effect on jobs, which could be further prevented “if companies reformulate their products”.
The move follows the publication last year of a draft policy paper and consultations with industry associations and other interested parties about the proposed tax.