The soft drinks and beverage industry will soon be forced to clearly indicate the fat, salt and sugar composition of products on the front of its packaging. Experts have also suggested that an increase in sugar tax – the current suggestion is to push it from 10% to 20% – will improve health outcomes and boost revenue collection.
The proposal was made just as the Minister of Finance Tito Mboweni is due to make his 2021 Budget Speech next week.
According to experts – as reported by SABC News – a further increase in taxes on sugary beverages will not only cause a reduction in diseases such as diabetes, but will also support the country’s ever-increasing tax collection shortfall.
According to Karen Hofman, who is the Director of the South African Medical Research Centre for Health Economics and Decision Science (SAMRC), a 20% tax increase on sugary beverages will help reduce comorbidities, which have led to increased COVID-19-related deaths among the population.
The government currently projects a R300-million shortfall in revenue in 2021’s budget. Experts, however, believe that a significant shortfall of R250-billion can still be recovered, as sin tax was lost during lockdown when alcohol and tobacco sales were banned.
“Of the alcohol, tobacco, and sugary beverages – those taxes in total comprise 3.5% of government revenue. The government is going to be collecting substantially less of what that they had anticipated,” said Director of Research at the University of Cape Town, Corne van Walbeek. “The main reason for that is because of the ban on cigarette sales during 2020 for 20 weeks and the three different bans on the sale of alcohol during that same time period.”
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