The Zimbabwean government says it has raised US$30.8 million from a special surtax on sugar content in beverages since its introduction earlier this year.
This surtax is intended to fund the procurement of cancer treatment equipment.
George Guvamatanga, the Permanent Secretary for the Ministry of Finance, Economic Development and Investment Promotion, revealed this in a letter to the Zimbabwe Association of Doctors for Human Rights (ZADHR) on December 13, 2024.
ZADHR had requested details about the sugar tax collection and its use.
The sugar tax was introduced on February 9, 2024, under the Customs and Excise (Tariff) (Amendment) Notice, 2024.
ZADHR also asked for information on the specific cancer drugs and equipment procured and the hospitals they were distributed to.
Guvamatanga said that procurement of medical supplies falls under the Ministry of Health and Child Care and referred ZADHR to that ministry for further information.
The government introduced the sugar levy to discourage high sugar consumption, which is linked to certain cancers.
Finance Minister Mthuli Ncube justified the introduction of the sugar tax as a response to growing concerns about the adverse effects of the consumption of sugar.
He said the funds generated from the levy would be ring-fenced for therapy and procurement of cancer equipment.
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The Zimbabwean government made $30.8 million from a sugar tax on drinks to help buy cancer treatment equipment. The tax started in February 2024. Doctors asked for details about the tax money and what it was spent on. The government says the Health Ministry takes care of buying medical supplies. The sugar tax is meant to stop people from drinking too much sugar, which can cause cancer. The Finance Minister thinks the tax is important because sugar can be harmful. The money from the tax is set aside for buying equipment and therapy for cancer patients.

Zimbabwe's Sugar Tax Generates US$30.8 Million In Revenue

The Zimbabwe Association of Doctors for Human Rights (ZADHR) has requested information from the government regarding the revenue generated from the sugar tax and whether those funds have been used for their intended purposes, reported <a href="https://www.newsday.co.zw/local-news/article/200035776/come-clean-on-sugar-tax-revenue-rights-doctors-tell-govt">NewsDay</a>.
In a recent letter to the information officer of the Ministry of Finance, Economic Development, and Investment Promotion, ZADHR’s lawyers, Kantor &amp; Immerman, cited section 7 of the Freedom of Information Act [Chapter 10:33] as the basis for their request. Reads the letter:
<blockquote>
(We request) an account of how much special surtax on sugar content in beverages has been collected from the date of gazetting of SI 16/24, the Customs and Excise (Tariff) (Amendment) Notice, 2024 (No 5) on February 9, 2024, to date.
(We request) an account of what cancer drugs and equipment have been procured to date and to which hospitals these have been distributed.
</blockquote>
Finance, Economic Development, and Investment Promotion Permanent Secretary George Guvamatanga has acknowledged receipt of ZADHR’s letter and assured that a response will be forthcoming. He wrote to the lawyers:
<blockquote>
I refer to the above captioned. I write this letter in terms of section 7(2) of the Freedom of Information Act [Chapter 10:33] (the Act) I acknowledge that your request in terms of section 7(1) of the Act was received by my office on November 25, 2024.
You shall be furnished with my response within the timelines prescribed by law.
</blockquote>
In the 2024 national budget, Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube introduced a tax of US$0.02 per gram of sugar in beverages.
However, following complaints from manufacturers, this was revised to US$0.002 and will be further reduced to US$0.0005 starting January 1, 2025.
In July, Health and Childcare Miniter Douglas Mombeshora said that the Treasury had generated US$8 million from the sugar tax, which was intended for purchasing cancer treatment machines, supplies, and medications.
By September, Ncube informed Parliament that the total revenue collected from the sugar tax had risen to US$18 million.
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Doctors want to know where the money from the sugar tax is going. They asked the government for information on how much money has been collected and how it is being used. The government has promised to respond. The sugar tax was originally US$0.02 per gram but has been reduced. The tax money is supposed to be used to buy cancer treatment machines and medicine. So far, US$18 million has been collected from the tax.

Doctors Seek Clarity From Government On Sugar Tax Revenue And Its Allocation

Delta Corporation Limited has paid US$20 million in sugar tax since the tax’s introduction in February 2024.
The tax, which came into effect at the start of 2024, charges beverage firms US$0.02 per gram of sugar in their products. In response to industry complaints, the tax was revised in March to US$0.001 per gram.
Delta executives have stated that the sugar tax has made the company less competitive within the region, particularly when comparing it to tax rates in neighbouring countries.
The full impact of the sugar tax on Delta’s financial performance will be felt in the financial year ending March 31, 2025, alongside other existing taxes.
At an analyst briefing on Wednesday, Delta’s CEO, Matlhogonolo Valela, told <a href="https://www.newsday.co.zw/business/article/200034671/delta-pays-us20m-sugar-tax-in-9-months">NewsDay</a> that the sugar tax in Zimbabwe is considerably higher than that in other regional markets. Said Valela:
<blockquote>
Well, since February, between ourselves and Schweppes, we have paid about US$20 million in sugar tax.
Obviously, the rates of sugar tax, we think, are very high compared to regional compatriots. Therefore, it brings a competitiveness issue.
That’s why you are seeing regional inflows of similar competing products into our territory. It is on the basis that we are slightly more expensive than what people can source from alternative markets around us.
</blockquote>
Delta has a 49% stake in Schweppes Holdings Africa Limited.
Valela said Delta is in talks with the government regarding the sugar tax, but any potential outcomes from these discussions are expected to be reflected in the 2025 National Budget.
Delta’s finance director, Alex Makamure, said the introduction of the sugar tax led the company to raise soft drink prices by 33%, which has hurt consumers. Said Makamure:
<blockquote>
So, it is a big tax from the rate at which it was imposed. So even at that US$0,001 per gramme, it is very high relative to other countries.
So, all our pleas to the government have always been, yes, it’s noble to introduce a sugar tax, but maybe look at the level…
Remember for us, your 300ml Coke was selling at US$0,25 or US$1 for four. We had to move to US$1 for three, which is a 33% increase. Quite huge from a consumer’s point of view.
Schweppes, for example, they were selling your 2-litre Mazowe at, I think it was, US$3,20 or U$3. They went to US$4.50.
They have sort of discounted, and now they are carrying some of the burden themselves. But it is very significant, particularly for your dilutable.
</blockquote>
Makamure said that Delta has no issue with the introduction of the sugar tax, but argued that it should be set at a level that minimises its impact on consumers while still encouraging a reduction in sugar consumption.
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Delta Corporation Limited has paid $20 million in sugar tax since February 2024. The tax charges beverage companies for the amount of sugar in their products. Delta says the tax makes them less competitive compared to other countries. They have raised prices, hurting consumers. Delta is talking to the government about the tax. They want it to be lower to help consumers. The impact of the tax will be seen in the company's finances in 2025. Delta owns 49% of Schweppes, which is also affected by the tax.

Delta Pays US$20 Million Sugar Tax In 9 Months

The government has collected approximately US$18 million from the sugar tax since the beginning of the year, according to Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube.
This controversial sugar tax was introduced to raise funds towards the procurement of cancer treatment equipment and accessories.
Announced in the 2024 National Budget late last year, the tax came into effect at the start of the year as part of measures to reduce the consumption of high-sugar beverages.
During a question-and-answer session in Parliament last week, Luveve-Emakhandeni National Assembly legislator Discent Collins Bajila (CCC) inquired about the sugar tax collection for the first quarter of 2024. In response, Ncube said:
<blockquote>
Madam Speaker, special tax of beverages with sugar content for the first quarter amounted to ZiG7,9 million, cumulative collections to date amounted to ZiG248,9 million which is equivalent to about US$18 million.
Treasury is in the process of working on modalities to join in with the Minister of Health for the procurement of cancer machines and drugs for distribution in our hospitals.
We are working speedily with the Ministry of Health and Child Care through the procurement processes so that we can acquire these machines and drugs as soon as possible.
</blockquote>
In his 2024 budget presentation, Ncube proposed a levy of US$0.02 per gramme of sugar contained in beverages, excluding water.
However, following lobbying from the Confederation of Zimbabwe Industries (CZI), which argued that the initial figure was too high, Ncube later reduced the tax to US$0.01 per gramme.
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The government collected $18 million from a sugar tax to get money for cancer treatment equipment. The tax started at the beginning of the year. The tax is meant to decrease the intake of high-sugar drinks. They are working to get cancer machines and medicine for hospitals. At first, the tax was $0.02 per gram of sugar, but they reduced it to $0.01 due to complaints.

Sugar Tax Raises US$18 Million In 2024

Captains of industry are in talks with the Government to reconsider the sugar tax currently pegged at US$0.001/gram, which has resulted in a sharp rise in beverage prices.
Speaking to <a href="https://businesstimes.co.zw/industry-govt-in-talks-over-sugar-tax/">Business Times</a>, Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza confirmed the ongoing engagements. He said:
<blockquote>
We are engaging the authorities. Yes we understand the validity of these taxes, but the increase of prices is extreme.
So we are engaging with the Government so that we can see ways in which prices can accommodate everyone at large.
There is an added tax on sugar which is US$0.001per gram and due to that tax producers of sugary products to cater for it, prices have to go up and you have seen prices of products like Mazoe Orange Crush and Beverages products they have gone up as a way of covering the US$0.001/gram tax which was put in place.
This will only mean that manufacturers of beverage products will lose market share, their volumes will go down because the consumers will not afford to purchase for the products and this will even force them to produce very few products hence a downturn in business.
</blockquote>
Zimbabwe National Chambers of Commerce (ZNCC), Mike Kamungeremu, said there is nothing they can do except factor the new sugar tax into the pricing of products. He said:
<blockquote>
Government is trying to raise revenue at the same time in some cases they are trying to discourage consumption of the same products, where you then say prices are going to come down, but prices are not going to come down regarding those items except if the tax is reduced or removed.
But as it stands because the tax has already been introduced it means those prices will now stay where they are and what we then anticipate to see is probably a reduction in their consumption or probably workers getting more so that they can afford them, but the truth of the matter is that the tax has been introduced and the prices have already gone up so it is a reality that we have to live with.
</blockquote>
An economic analyst Victor Bhoroma warned that the sugar tax will make Zimbabwean products less competitive on foreign markets. He said:
<blockquote>
The sugar tax has several ramifications on food and beverages in the country. Sadly, a noble cause to raise tax revenues has a direct bearing on the cost of production, cost of produce, final prices and food consumption patterns.”
It is inevitable, that the majority of already poor Zimbabweans will no longer afford their homegrown renowned brand.
It speaks to the impact of taxation and monetary regulations on the competitiveness of local products. We are pricing ourselves out of a few export markets we were left with.
</blockquote>
Economist Vince Musewe said the sugar tax is a misinformed policy that ignores the social impact. Said Musewe:
<blockquote>
This sugar tax is a mere means to collect more taxes and not about health. We will see reduced demand for affected products and cheaper imports which works against the imperative to industrialise while stifling local companies that are producing drinks. For me it’s a misinformed policy that ignores social impact.
</blockquote>
Earlier this month, Finance, Economic Development, and Investment Promotion, lowered the sugar tax from US$0.002 to US$0.001 per gramme of sugar.
Ncube had announced the 0.002 cents per gramme in the 2024 national budget statement in November 2023.
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