Bid to 'limit impact' of proposed sugar tax

Various processes both within government and the National Economic Development and Labour Council (Nedlac) are underway to resolve differences over the proposed health promotion levy‚ previously dubbed the sugar tax

Treasury deputy director general Ismail Momoniat said on Tuesday that an inter-departmental committee consisting of Treasury and the departments of economic development‚ agriculture‚ trade and industry and labour was working on a mitigation strategy to limit the impact of the proposed levy on sugary beverages.

The proposal is to tax sugary beverages at a rate of 2.1c per gram of sugar beyond a threshold of 4g of sugar per 100ml.

Industry has estimated that job losses across the value chain would number about 24‚000‚ with 1‚795 permanent and 2‚835 seasonal jobs being lost in sugarcane farming. The estimate of the Congress of South African Trade Unions is about 7‚000 job losses.

Momoniat told members of Parliament's standing committee on finance that he was "optimistic" that a solution would be found. He added in an interview that he did not expect the introduction of the levy to be delayed and it could take effect in the first few months of next year when the Rates and Monetary Amounts and Amendment of Revenue Laws Bill was promulgated.

Acting finance committee chairman Derek Hanekom said the progress was encouraging. No party was going to be completely happy‚ he pointed out‚ as there were conflicting interests at play.

A Nedlac task team has also been working on the issue and is due to submit its proposal to the organisation's chamber next week.

Both labour and business have supported the proposal that an independent study be undertaken to assesss the impact of the proposal but Momoniat said this might not be necessary before implementation of the levy. It could form part of the ongoing evaluation and monitoring of the levy once it has been introduced.