SIN TAX: Sugar jobs may be lost
Smokers and alcohol drinkers need no longer feel alone when it comes to being the targets of punitive excise duties. From April 1 they will be joined by consumers of sugary drinks.
The initial hit that sugary-drink consumers face is a levy of 2.1c/g of sugar, with the first 4g/100ml exempt. Hogan Lovells estimates that the levy will lead to an 11% rise in the price of sugary drinks.
It will also extract over R1bn in additional tax revenue from consumers.
The SA Revenue Service describes the sugar levy as being in support of the department of health’s aim to decrease diabetes, obesity and other related diseases. But it comes with more than just an added cost to consumers.
A study conducted by the Bureau for Food & Agricultural Policy for the SA Sugar Association found that the levy will result in a 200,000t fall in annual sugar demand which in turn will lead to the loss of an estimated 3,129 direct farm jobs, most of them among small growers.
For smokers and consumers of alcoholic beverages, finance minister Malusi Gigaba had more of the same bad news they have been getting since 2002: excise duty increases will be above the inflation rate.
Between them, drinkers and smokers are projected to contribute an additional R1.33bn in tax revenue in 2018/2019.
Liquor consumers face proposed excise duty increases of from 6% to 10% which will extract an additional R910m in tax revenue.
Hardest hit, at a 10% rise, are beer drinkers who will soon find the price of their favourite brew jumping by 14.6c/340ml can.
It takes the total excise duty payable to 161.56c/340ml.
Coming off comparatively lightly, fortified-wine drinkers will pay an extra 37c/l. The 6% rise takes total tax on fortified wine to R6.54/l. But it is still well above the R3.91/l for unfortified wine, which represents by far the largest portion of the wine market.
Smokers will feel the pain of an 8.5% rise in tax on cigarettes that will take excise duty to R15.52 on a pack of 20.
Ostensibly tax on "sin" products such as cigarettes and alcohol are aimed at cutting consumption. Reality seems to tell another story.
According to British American Tobacco (BAT), illegal tobacco products today account for 24% of the SA market with an estimated 5.5bn illicit cigarettes sold in this country annually. Loss of tax revenue is said to be about R5bn/year.
It also suggests very poor policing by Sars. BAT estimates that 80% of the total trade in illicit tobacco is manufactured locally.