Bitter pill for smokers and drinkers
Minister gets hard on vices in an effort to promote good health . . . and raise funds for the fiscus
All things sweet and sinful will come at a higher price in 2017.
Finance minister Pravin Gordhan said during a media briefing that government had not forgotten about those who drink and smoke tobacco when deciding what to tax.
“We want to look after your hearts and lungs as well, so the appropriate [tax] increase [has been made],” said Gordhan.
Treasury continued its above-inflation adjustments — which it started in 2002 — to the excise duties on alcohol and tobacco.
The tax on traditional tobacco products such as cigars, cigarettes and pipe tobacco will be raised by between 8% and 9.5%. This will raise an additional R656m. Treasury has not proposed any excise duties on e-cigarettes, which entered the SA market a couple of years ago.
Excise duty increases on alcohol of between 6.1% and 9% are proposed for the 2017 budget. This will raise R1.2bn.
This will result in a bottle of unfortified wine costing 30c more per litre and a bottle of whisky R4.43 more, while beer will increase by 11c/340 ml.
Gordhan indicated that the proposed sugar tax would be implemented later this year. But the necessary legislation still needs to be approved by parliament and signed by President Jacob Zuma.
The minister said that the tax has been revised to include both intrinsic sugars that are in beverages like fruit juice and products with added sugars such as soft drinks.
The proposed tax rate will be 2.1c/g of sugar in beverages that contain above 4 g/100 ml. Concentrated beverages that need to be mixed with water will be taxed at 50% of the rate. Gordhan said that further consultations are taking place on the tax on sugary beverages.
Treasury indicated that its preliminary socioeconomic impact assessment shows a relatively small effect on job losses, most of which can be prevented if companies reformulate their products. This is contradicted by a number of beverage manufacturers that have said the tax would affect their businesses negatively.
A number of places such as Denmark, Finland, France, the UK and Norway already have taxes on sugar-sweetened beverages.
Prof Karen Hofman, an expert in health policy and sugar tax from Wits University’s School of Public Health, says the impact on jobs has been exaggerated by the industry. Hofman says evidence shows there have not been any job losses in jurisdictions where a sugar tax has been introduced around the world.
“People will buy other products to drink that are cheaper and healthier, so there won’t be job loses. We can have as many consultations as we like but this will never be resolved, except by implementing and showing it does not make any difference [to jobs],” Hofman says.
Hofman says noncommunicable diseases like obesity and type 2 diabetes are currently costing SA roughly 6.2% of GDP.