Treasury exposes abuse of sugar tax for profiteering
THE Government has condemned the abuse of the beverages sugar content tax and other tariff measures by some businesses that deliberately misinterpret clear policy propositions for profiteering while unjustifiably punishing innocent consumers.
While consumption taxes are charged on the consumption of goods and services and are generally imposed at the time of the transaction, some businesses have gone overboard to disproportionately apply these taxes beyond their intended purpose, sparking an outcry from consumers.
Examples include the recent obscene retail price increases of soft drinks, alcoholic beverages and a range of value-added dilute juices. Others have gone to the extent of wrongly applying the tax on raw sugar.
In a statement yesterday, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, said the application of the sugar tax, in particular, has been misconstrued by businesses, and expressed the Government’s disdain for the recent price increases purportedly attributed to it.
The Government has already made a commitment to initially ring-fence the revenue generated from the Beverages Sugar Content Tax for therapy and procurement of cancer equipment for cancer diagnosis.
As a sign of such commitment, Prof Ncube said Treasury will soon be commissioning the machines purchased therefrom, and that subsequent procurements will be advised accordingly.
Notwithstanding the above positives, he said the Government was disturbed by the unjustifiable increase of prices for some beverages, which is unreasonably attributed to the impact of the Beverages Sugar Content Tax.
“Such behaviour by the responsible manufacturers, wholesalers and retailers is a dear demonstration of incorrect interpretation and, in some cases, profiteering.
“Government has, at its disposal, the prices charged by such operators prior to the introduction of the tax, the maximum impact of the beverage sugar content tax on the beverages in question and the expected prices thereof,” said Prof Ncube. “The Beverages Sugar Content Tax has been misconstrued as a levy on sugar when it is applied differently. The tax is, rather, applied on the sugar content in beverages (drinks) specified in current legislation,” the minister explained.
“Government wishes to categorically state that the tax does not apply to sugar in general, hence, should not be misinterpreted as affecting ordinary consumption. Producers of sugar, are, thus, not affected.”
Specifically, Prof Ncube clarified that the sugar tax is applied to the “added sugar” in specified beverages, excluding natural sugar, to encourage responsible consumption of sugar contained therein.
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