SARS to begin collecting sugar tax in April
President Jacob Zuma has signed the health promotion levy (or sugar tax) into law and the South African Revenue Service (SARS) has announced that it will begin collecting it from April 1 2018.
The Treasury estimates that the levy, while not intended as a tax-raising measure, will bring in revenue of between R1bn and R1.5bn for the fiscus annually. The levy is part of the government’s efforts to prevent and control noncommunicable diseases and to combat obesity.
It has been set at 2.1c a gram of sugar content that exceeds 4g per 100ml, which means the first 4g per 100ml will be free of the levy.
The levy is provided for in the Rates and Monetary Amounts and Revenue Laws Amendment Bill, which was passed in Parliament on December 5 and signed by Zuma last week.
This followed lengthy negotiations in the National Economic Development and Labour Council (Nedlac) and extensive public hearings by Parliament’s finance committee.
Treasury deputy director-general Ismail Momoniat welcomed the promulgation of the measure, saying that it was a "big step forward towards a healthier SA".
The Beverage Association of SA, however, is opposed to the levy, which it says will have "substantial unintended economic consequences at a time when the economy is facing strong headwinds".
It has warned that it would place about 25% of direct industry jobs at risk.
Cosatu is also concerned about job losses and a possible decline in investments but at the same time acknowledges the dangerously unhealthy diets and lifestyles of South Africans.
"We are also concerned that this tax is being introduced in a sector that has already seen thousands of workers retrenched on sugar farms and mills over the past 15 years due to a flood of cheap subsidised imports from Brazil and other countries," the federation’s parliamentary co-ordinator, Matthew Parks, said.
He said Cosatu hoped that the Nedlac-negotiated jobs plan for the sector would bear fruit.
This included measures to raise import tariffs on sugar to reduce imports; to ensure that both the public and the private sectors and society bought locally produced sugar; to promote exports to neighbouring African states; and to promote healthier products.
SARS said that the Customs and Excise Act provided for a health promotion levy on sugary beverages that had been manufactured in or imported into SA. Imported products would be taxed when they were cleared for home consumption, and locally manufactured products would be taxed at source.