Mthuli Ncube Defends Unpopular Sugar Tax, Says Beverages Price Increases Are Unjustified | Full Statement
STATEMENT BY THE HON. MINISTER OF FINANCE, ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION ON TAX POLICIES ADOPTED BY GOVERNMENT TO GUIDE CONSUMER BEHAVIOUR
1. Government, in observance of the principles of transparency and accountability, takes this opportunity to enlighten the general public on the broad tax policy considerations that have traditionally guided the development of the taxation system, in particular, consumption-based taxes.
2. Consumption taxes are charged on the consumption of goods and services and are generally imposed at the time of the transaction. Targeted tax instruments may, thus, be used to influence or re-direct such consumption, especially, where consumption is deemed or scientifically proven to impose negative externalities to Society.
3. Development and refinement of tax policy measures has always been a result of a consultative process involving business, consumer organisations, civil society, academia, Government Agencies and the general public, among others. Such consultations are in view of the fundamental roles of Stakeholders to exercise their Constitutional right to influence public policy in a responsible manner, with a view to developing this Great Nation.
4. Government has recently noted with concern, the imposing nature of the input from some stakeholders on recently introduced tax measures, notwithstanding the distinct role between stakeholders and policymakers.
5. The implementation of the National Development Strategy 1 (NDS1) is premised on the recognition that bold and transformative measures are needed to underpin the drive towards the attainment of our Vision 2030.
6. One of these measures includes the introduction of the Beverages Sugar Content Tax aimed at addressing quality of life and health matters through mobilising revenue that would be channelled towards such causes.
7. The Beverages Sugar Content Tax has been misconstrued as a levy on sugar when it is applied differently. The tax is, rather, applied on the sugar content in beverages (drinks) specified in current legislation.
8. Government wishes to categorically state that the tax does not apply to sugar in general, hence, should not be misinterpreted as affecting ordinary consumption. Producers of sugar, are, thus, not affected.
9. Specifically, the tax is applied on the Added Sugar in specified beverages, excluding natural sugar, with a view to encouraging responsible consumption of sugar contained therein. It is scientifically proven that excessive consumption of added sugar in beverages is linked to an increased risk of non-communicable diseases.
10. The revision of the tax to US$0.001 per gram is a clear testimony of the commitment by Government to carefully consider and adopt constructive input from relevant stakeholders.
11. Government is also aware that some Producers cannot immediately reconfigure their production processes, whilst there is a commitment to reduce the sugar content by other manufacturers. On the other hand, consumers have to also make the conscious choice to consume responsibly, in view of the negative impact of excessive consumption of sugar on their health status.
12. Government has already made a commitment to initially ring-fence the revenue generated from the Beverages Sugar Content Tax for therapy and procurement of cancer equipment for cancer diagnosis. As a sign of such commitment, Treasury will be commissioning the machines purchased therefrom, and subsequent procurements will be advised accordingly.
13. Notwithstanding the above, Treasury notes the unjustifiable increase of prices for some beverages which is unreasonably attributed to the impact of the Beverages Sugar Content Tax. Such behaviour by the responsible manufacturers, wholesalers and retailers is a clear demonstration of incorrect interpretation and, in some cases, profiteering.
14. Government has, at its disposal, the prices charged by such operators prior to the introduction of the tax, the maximum impact of the Beverage Sugar Content Tax on the beverages in question and the expected prices thereof.
15. Government will continue to consult, as wide as possible, with relevant stakeholders, with a view to ensure enactment of evidence-based policies.
16. In addition, Government remains committed to the implementation of measures targeted at the timely realisation of the NDS1 objectives, also conscious of the Mantra, “Nyika inovakwa nevene Vayo/llizwe lakhiwa ngabanikazi balo”.
Hon. Prof. M. Ncube
MINISTER OF FINANCE, ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION
27 February 2024
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