Bit­ter pill for smok­ers and drinkers

Min­is­ter gets hard on vices in an ef­fort to pro­mote good health . . . and raise funds for the fis­cus

Financial Mail - Investors Monthly - - Budget 2017 - Per­i­cles Ane­tos ane­tosp@times­me­

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.

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