Cape Town – Finance Minister Pravin Gordhan has proposed a new tax on sugar-sweetened beverages, as government increases its efforts to tackle obesity.
Tabling the 2016 Budget in Parliament on Wednesday, the Minister said government has been mindful of the need to moderate the impact of tax increases on households and firms in the present economic context.
“Our tax proposals include … an introduction of a tax on sugar-sweetened beverages,” the Minister said.
In its budget review, National Treasury said obesity stemming from over-consumption of sugar remains a global concern.
The problem has grown over the past 30 years in South Africa, which has the worst obesity ranking in sub-Saharan Africa, and led to greater risk of heart disease, diabetes and cancer.
National Treasury said the Department of Health has published a policy paper on the growing problem of obesity.
“Fiscal interventions such as taxes are increasingly recognised as complementary tools to help tackle this epidemic. Countries such as Denmark, Finland, France, Hungary, Ireland, Mexico and Norway have levied taxes on sugar-sweetened beverages. Government proposes to introduce such a tax on 1 April 2017 to help reduce excessive sugar intake.”
Sin taxes to rise
The Minister said, meanwhile, that excise duty on alcoholic beverages and tobacco products will go up by between 6% and 8.5% respectively.
According to the National Treasury, in line with health and fiscal policy objectives, tax rates on alcoholic beverages have been consistently increased beyond inflation since 2002.
Mixtures of grain-fermented beverages, such as beverages made from maize, with an alcohol content ranging from 2.5% to 9% by volume are proposed as an additional excise duty category.
These beverages will be taxed at the beer rate based on absolute alcohol content, National Treasury said.
How your alcohol consumption affects your pocket
Duties on malt beer will be increased by 8.5%, which means that an additional 11 cents will be charged on top of the current excise duty of R1.24 cents for a 340 millilitres can.
While unfortified wines will cost 24 cents more per litre, fortified and sparkling wines will cost 36 cents more per litre and 73 cents more per litre respectively.
Spirits go up by 8.2%, and will cost R161.47 per litre of absolute alcohol content.
An excise duty of R13.24 per box of 20 cigarettes will be imposed.
These measures come into effect effective immediately.
Meanwhile, National Treasury said historical changes in duty structure and regulatory requirements have led to brandy being at a competitive disadvantage relative to other spirits.
To level the playing field, government proposes that a 10% lower excise duty, based on litres of absolute alcohol content, be applied to pot-stilled and vintage brandy, and phased in over the next two years, the National Treasury said.
The excise adjustments for cigarettes, cigarette tobacco and pipe tobacco are attributable to inflation-linked price increases for the most popular brands in each category.
A review of tobacco product taxation will begin in 2016/17, and will consider both existing and non-traditional tobacco products and their alternatives, such as e-cigarettes. – SAnews.gov.za
